Sports Media 2025: A Rights Buyer’s Guide: John Kosner’s Latest SBJ Column with Ed Desser
Original Article: Sports Business Journal, by John Kosner and Ed Desser, October 28th, 2024
What to do today if you’re a sports rights owner who is considering media partners, but you’re not the very biggest and most popular? Each option has benefits and drawbacks — it is all important to understand how to map out your best strategy.
For most of the last four decades, sports media options were broadcast and cable TV, period. These delivered maximum audiences, and usually, the largest potential revenue. National rights were placed on big broadcast and cable networks; local/regional rights on broadcast stations and RSNs. With competition and some luck, you’d generate fair market value. Easy-peasy!
You made those decisions based upon available shelf space, relationships and ability to commercialize. Originally, broadcast was preferred over cable because it maximized exposure. As cable networks grew their “dual revenue streams” (subscriber fees and ad sales), the tide shifted, and cable started to outbid broadcasters. Elite programming migrated to ESPN, FS1, TNT/TBS and NBCSN (RIP). When the internet intervened, sports media crossed the Rubicon with Amazon’s exclusive streaming deal for NFL “Thursday Night Football” two years ago.
Today, choosing a platform is not simple at all:
To maximize potential audiences, once again look to broadcast networks (as the NBA just did by adding NBC), and/or streamers such as (176 million-plus U.S. subs) Amazon Prime (another recent NBA deal), or (70 million-plus U.S. subs) Netflix (NFL Christmas Day). No cable network by itself, including ESPN, can reach that potential audience size anymore. As they harness their unique and impressive promotional arsenals, Prime Video and Netflix may soon exceed the audience delivery of broadcast networks. Like Apple for MLS, they also offer a one-stop shop for global distribution. However, the biggest broadcasters and streamers remain focused primarily on the major leagues, which are now spread across more smaller packages, while paradoxically, the key techs want to own something.
If you’re not one of those, but want to generate the most revenue, traditional pay-TV networks are still (and forecast to remain this decade) the biggest spenders on sports rights. They have to be, to defend their affiliate distribution business. Thus, the French Open was worth multiples more to WBD than to incumbent NBC. Revenue is revenue; it can come in cash but also ad inventory, or in-kind (production support, travel services, marketing, etc.).
If you’re looking to reach younger audiences (see our Sept. 16, 2024, column) for live content, you must start with entertainment networks (formerly known as social media), YouTube and perhaps Twitch and consider Instagram, Facebook, TikTok, Snap and X for clips. These are strictly ad sales/revenue share opportunities. So too are the growing, free ad-supported streaming TV (FAST) channels Tubi, Pluto TV and Roku Channel.
Since it is no longer possible to reach all fans simultaneously on a single platform, you must redefine your property’s form of “exclusivity.” Discovery of sports content is a major industry challenge. Your app, website and social platforms all require video content to grab attention and serve your fans well. You must be singularly focused on your own community-building. Much of this distribution can be advertiser-supported, but little of it will generate subscriber fees. Together, with multiple feeds, this is the new normal.
Younger fans favor streaming, and there are many premium options including ESPN+, Peacock, Paramount+, Max, AppleTV+, DAZN, FloSports, and betting platforms such as DraftKings and FanDuel. Digital league packages such as NFL+, NBA TV and MLB.TV are expanding. As RSNs shrink, look for MLB to offer near-comprehensive local offerings. All may also explore third-party content acquisition.
Locally, everything old is new again. Fewer teams have games exclusively on challenged RSNs; more are shifting to local TV station groups complemented by streaming services. These deals may not ever return the same guaranteed rights revenue, but broader total exposure is possible, with incremental ad revenue plus shares of retransmission consent fees, and other business development as partial compensation for lost rights money.
Indeed, choosing between these myriad options is complicated. If your property is small but has a passionate following, it may be a better fit for VOD streamers that value subscription lift. Not so if you will benefit more from broader free exposure, through ticket sales, event sponsorships and commerce. It’s also critical to understand the strengths and weaknesses of your potential partner(s). Do they have news and entertainment programs that can spotlight your sport beyond games? Can you enlist their ad sales group? If your partner is a tech company, is it committed to sports? What traditional capabilities does it have or lack? Linear networks such as ESPN, TNT and Fox have sports in their respective DNA. That matters, too.
Today, most successful sports properties have transitioned from being just rights sellers to becoming their own executive producers. Remember, more fans will experience your property via media than will ever attend an event. This means not just relying on intermediary licensees to present your product to your fans. Execution in this age of video content abundance is a lot tougher … and … we’re not going back. But this new era allows the most aggressive, creative and able to use emerging technologies to supercharge growth. Lamenting that your media partner does not understand your product or fans never worked, much less now. Recently we’ve seen expanded — and deserved — interest in NCAA women’s basketball, the WNBA and the NWSL, among others. Ten years ago, there was no bidding war for UFC; next year there will be. You must have a plan. As much as things change, some stay the same.
Ed Desser is an expert witness and president of consultancy Desser Sports Media Inc. (www.desser.tv). John Kosner is an investor in digital startups and president of consultancy Kosner Media (www.kosnermedia.com). Together they developed league TV strategy and ran the NBA’s media operations in the ’80s and ’90s.
Reason to Believe in Blockchain and Sports: John Kosner’s Guest Column in Sporting Crypto
Original Article: Sporting Crypto, by John Kosner, September 23rd, 2024
Sports Business - Braced for Change? ⚖️
In person, I pay almost every expense using my Apple Watch. A wireless technology called Near-field communication (NFC) allows devices to communicate when they are within a few centimeters of each other. I do so even though my physical wallet is itself only a few centimeters away. That’s how emerging technologies take root – they enable something better by being fast and easy; we use them and don’t even know their names. The sports business is always in pursuit of incremental revenue. In the U.S., the NFL and NBA’s most recent media agreements are worth $111 billion and $76 billion respectively both over 11 seasons. Streaming has begun to usurp traditional pay TV. Yet the Leagues’ respective revenue sources still look pretty familiar: it’s Media (TV and now Streaming) plus Advertising and Sponsorships, Consumer Products, Data & Betting, and of course, Ticket Sales.
Despite decades of work to gather certain fan information and create better fan data platforms, pro and college leagues, Teams and events still know relatively little about their fan bases. It has been less than a decade since bar codes and scans first replaced paper tickets. Personalization in the industry remains rudimentary. Meanwhile, MLB, NBA and NHL Teams face significant financial challenges as the once-bountiful local and regional U.S. sports pay TV business continues to melt. Across the Atlantic, many key football media deals are stagnating and some, like France’s Ligue 1, have actually decreased from 2016-2020 highs.
Nonetheless:
Sports leagues, Teams and events own extremely valuable IP;
The opportunity to reward fans with – and benefit from – their intimate relationships with the Teams, players and events they love is there;
Younger fans are digital-first and value ownership of virtual goods from video games
and
Sports tends to be a copycat business (one solution can populate throughout).
This helps explain why Blockchain technology has long been suggested as a next big thing for Sports. Is ‘next’ coming now or soon? I think so. If you are a decision-maker, it’s probably time to take a fresh look. If you’re building new products, it’s worth thinking bigger. The sports industry needs a breakthrough.
For the past several years, Blockchain technology has largely failed to do that in Sports. Yes, there have been several significant sponsorships (the L.A. Lakers play at the Crypto.com Arena; Coinbase is a big NBA and WNBA Partner), Dapper Labs’ NBA Top Shot was a COVID comet but largely forgotten since; Sorare excited Soccer, MLB and NBA fantasy players, generating an industry-leading valuation yet it has consolidated to just a hardcore active customer base, while growing its free-to-play product. Globally, Teams have launched multiple “Fan Token” programs utilizing the Blockchain, but fans have gotten relatively little in return (e.g. choosing pre-game music). And, of course, the entire industry has labored under the accompanying, self-inflicted fraud, corruption and speculation of Cryptocurrency companies and bad actors.
Today, many Sports decision-makers remain confused or ignorant about the merits of Blockchain ... “How is it different from just a database?” ... and view it as an unnecessarily risky proposition. If phase one of Blockchain was about cryptocurrencies and speculation and phase two, NFTs and Tokens that ultimately meant little to nothing, what’s next is about data – and that’s potentially quite compelling. In the shadows of scandal, important infrastructure work is improving the technology’s speed and capabilities. It is beginning to come of age. Blockchain’s "immutability" is critical in finance where transactions need "finality" and tamper-proof security, but the nature of its decentralization is a more important factor for sports because that's the aspect that allows for our industry’s rightsholders (leagues, Teams, events) to set the rules, allowing their many providers to work better together on their behalf -- in real-time. Best of all, this data phase requires no new action by fans – nothing to buy, download or a new website to visit; the technology lives in the background.
Is Blockchain Ready for Prime Time? 🤔
Six years ago, the entrepreneur Sandy Khaund sold his Blockchain ticketing firm, UPGRADED, to Ticketmaster. Sandy then spent two years at Ticketmaster and now has a new startup, Credenza, a modern customer data platform focused on sports and media built atop the Blockchain. The NHL’s St. Louis Blues are an early client. For the Blues, Credenza is assigning Blockchain wallets to fans, gathering data from various touchpoints, and using that data to deliver fans real-time, hyper-personalized experiences beginning this season. The Blues’ product is aptly called "Passport."
With his background both at Blockchain startups and at Ticketmaster, an established Sports U.S. ticketing giant, Sandy offers three key reasons why the technology is getting ready for prime time:
Blockchain enables a synchronization of our identity that is not owned by digital goliaths like Google/Facebook/Amazon and contains no personally-identifiable information. I can be John Kosner with an unrecognized, consistent digital identity on ESPN, the Knicks, Ticketmaster, Fanatics, etc. To date, sports leagues have avoided integrating their fan identity services with Google, Apple, et al. We rarely see “Sign in with Google” as an option. Instead, most leagues have built complex identity infrastructures, such as NBA ID. Blockchain has the potential to make fan identity more interoperable between the major leagues (NFL/MLB/NBA/NHL/MLS, etc.) should that become a goal of one or more Leagues. Additionally, Teams in the same city or part of the same ownership group across multiple sports might want to share fan data. Fans could be OK with that because they can be far better served without their actual identity being known thanks to the privacy protections afforded by the technology. On a more prosaic level, the tech could shorten League ID development cycles and connect currently siloed data points.
The newest generation of Blockchain “smart contracts” are more sophisticated and effective. Now, a rightsholder like the Blues can set different rules for sharing data with its various licensees – with the biggest, or most strategic, getting a certain level of access to the smallest getting less.
The combination of “1” and “2” is that Blockchain allows authorized partners/vendors/sponsors to “listen for” data updates, making possible real-time offers that create a more personalized experience for fans. Imagine you’ve purchased tickets to take your son to the Warriors opener on Oct. 27 and that morning you get a message from the in-venue merchant that says, "Hey, can't wait to see you at Chase Center for the Warriors. Can we set you up with a new Steph Curry jersey for your son? His old Klay Thompson jersey isn't the same now that he's in Dallas. Does he still wear a medium?" That example takes the trigger of a ticket purchase, reviews what is knowable about the fan, and lets the merchant responsible for the sale create a relevant message – almost immediately after the fan bought the ticket and while basketball is still on his or her mind. Too frequently, the current practice is either a generic game-day offer or a follow-up email the morning after the game, when the urgency of being there has passed. Making possible the right offer to the right person at the right time creates more value—that thing that sports organizations need.
If this all sounds familiar, it is: that’s how video games operate today. But those games are closed systems. Considering the ever-escalating cost of sports rights, the Sports media giants of the future will likely offer a combination of live rights (to generate and sustain subscription, ad and sponsorship revenue) and entice this funnel of customers into sports betting, tickets, merchandise, collectibles and video games. Being able to better understand and then instantly serve fans will become more and more crucial.
As mentioned, NBA Top Shot got off to a breathtaking start in 2021 as hundreds of thousands of fans collected unique digital video highlights. Alas, demand collapsed, disappointing speculators. Meanwhile, mere collectors found relatively little to do with their digital highlights. But this idea – the modern virtual trading card – will rise again; likely, with digital and physical capabilities and experiences built in.
The Opportunity 🔮
The biggest opportunity for Blockchain might be in identity. For the past two years, Reddit has seen great success with its successful Avatar Collectible program and OneFootball has just launched OneFootball Club. Today, none of the major league registration programs, such as “NBA ID,” are built on the Blockchain but in time they might migrate there. Fans want the ability to signal their fandom and document it; and then, in return, get various rewards and access from the League and Teams and potentially players. In time, that could be a big business. Apple created a global network of iPhone users and then built a massive services business around it. To create a similar (albeit much, much smaller) model, Sports Leagues, Teams and Events will have to take the fan benefits much more seriously, correcting the failure of the multiple recent “Fan Token” programs. NBA Commissioner Adam Silver has made the point that 99% of the League’s fans will never attend an NBA game in person. But these emerging technologies enable the NBA and others to engage much more closely and derive a lot more value from that 99% of their fandom.
Indeed, there’s reason to believe.
Think about what’s happening in digital identity outside Sports. According to a Reuters report, California's Department of Motor Vehicles (DMV) has digitized 42 million car titles using Blockchain in a bid to better detect fraud and improve the title transfer process. The DMV worked with Oxhead Alpha on Ava Labs' Avalanche Blockchain. It is anticipated that in the first quarter, 2025, California's more than 39 million residents will be able to claim their vehicle titles through a mobile app, the first such move in the U.S. Digitizing car titles is a potential win/win – reducing the need for in-person DMV visits and serving as a deterrent against lien fraud because Blockchain creates a transparent and unalterable record of property ownership. Important to note: the California DMV will use a private, “permissioned” Blockchain providing its required security and controls.
Even more significant, with the DMV, in addition to titles, we can move to licenses. One of the most valuable reasons to do that is that a driver's license not only allows you to drive on the roads in California but also to drive in 49 other states and elsewhere. It serves as identification with TSA at the airport, it notifies medical personnel if you are a donor in case of an accident.
Shift that to Sports: the ubiquity of a license is similar to this concept of synchronous, anonymous fan identity across ticketing, sponsorship, concessions, merch, content, betting, etc. It’s a potential, “Hello, World!” moment for the technology, according to Khaund. “It’s where Blockchain shines.”
Since Sports is global and connected, when that “Hello, World” moment comes for our industry, it will be game-changing. In tech and life, you can have the right idea, but timing is everything. Earlier brilliant plans for online food delivery, personalized short-form video and live event streaming came too early and collapsed in red ink. New technologies tend to break through when you don’t even know you’re using them, you just appreciate brand-new functionality. You don’t know or care what they’re called or how they work.
Pay attention to Blockchain for Sports. Mainstream moments are closer than you think.
Reaching Young Audiences: John Kosner’s Latest SBJ Column with Ed Desser
Original Article: Sports Business Journal, by John Kosner and Ed Desser, September 16th, 2024
What keeps you up at night?
If you’re a sports media, league or club decision-maker, No. 1 is probably the alarming, unprecedented decline/change of the traditional pay-TV ecosystem, the industry’s financial growth driver and exposure linchpin for the past four decades.
No. 1-A is how to reach and engage young fans.
This summer, Comcast/NBC’s coverage of the Paris Olympics and Fox Sports’ “Summer of Soccer” provided breakthrough ideas and execution. As we consider this challenge, thoughts turn to:
The Experience and Interface
Community Building
Character and Integrity
First, winning in today’s era of media content abundance requires developing a plan for new audiences. In contrast to prior generations introduced to and captivated by sports through communal couch TV viewing and actually playing sports outside, today’s youth grew up with smartphones, social media, video games, fantasy and betting. Now, experiences and interfaces must take advantage of technology’s capabilities to get fans more actively involved. That doesn’t mean totally novel approaches — with TV Everywhere, we put the same content on every device. Then, mimicking the games business, we program differentiated content of an event designed for particular platforms on different services.
Since 2009, “ NFL RedZone” has revolutionized coverage of the nation’s favorite sport. Not surprisingly, Peacock medaled with its own “GoldZone” whip-around, which teed up climactic events and reminded viewers how many (and how varied) there were. Same for “Multiview” — (up to) quad boxes of different sports airing simultaneously that more than 25% of Peacock’s Olympic viewers used to create their own customized GoldZone. Both reached average audiences 10-15 years younger than linear NBC. Comcast’s embrace of tech enabled a never-before-available range of consumer choice and discovery. Fans could watch the Games live (“Paris prime time”); as a curated movie (“U.S. prime time” — an elegantly crafted presentation interwoven with backstories and contextual replays — like the Olympics of our youth!); sport by sport; and via widely distributed highlights on multiple platforms. On Peacock, fans had access to up to 60 simultaneous “world feed” livestreams, plus replays with no spoilers, and could search and locate content by sport, athlete, medal round or date. It was always on … and it all worked! Considering the popularity of TikTok and YouTube, it’s not a coincidence that short duration viewing of swimming and track and field events proved popular, or that the men’s Dream Team seemed even better playing four 10-minute quarters. And everything started on time, as scheduled.
A Summer Games breakthrough: Viewers were able to customize Peacock’s “GoldZone” to include simultaneous events.
Second, the only way to battle today’s extensive fragmentation is to aggregate your audience. That means putting communities of followers together. Inspired by social media, fantasy and now betting, fans increasingly root for players more than teams. NBA players such as Steph Curry are like Marvel superheroes for kids. So, the International Olympic Committee and NBC liberalized their historically restrictive social media policies and used the athletes’ own channels to help drive discovery and tune-in, leveraging direct deals to create digital hubs — such as TikTok’s use of the French mascot Phryge as top-of-screen content navigation. For upcoming Games, look for customized athlete highlights distributed immediately after a performance to tease follow-up event tune-in, which the U.S. Olympic and Paralympic Committee and NBC experimented with during some of this year’s U.S. Olympic trials. Additionally, taking a page from entertainment, celebs such as Snoop Dogg, Sabrina Carpenter, Megan Thee Stallion and Lily Collins made it cool for their fans to co-watch the Games with their idols. According to Wired, nearly a third of new Olympic viewers say that clips on social media drove them to tune in.
Earlier this summer, for its coverage of the Euro and Copa soccer tournaments, Fox simulcast the first five minutes of every match live on YouTube, TikTok, Instagram, Facebook and X. Ratings exceeded expectations — not only because these social media networks are where young fans are, but also because these platforms up-rank live content versus video-on-demand. No surprise: Fox has now extended its “free preview” to college football. The first drive of every major CFB game on Fox/FS1 is being offered live/free across social, followed by promos and deep links to watch authenticated in the Fox Sports app. Similarly, NBC is bringing Multiview to Premier League. That’s a way to bring back “cord cutters” and attract “cord-nevers” to linear TV and streaming.
Third, in a polarized world, the beauty of sports is that it brings people together, at scale, at the same time. It also has winners and losers; and, in general, those are not in dispute. We love sports because the games and individual performances thrill us, and we trust the outcomes. We see character and root for it.
That extends to those who broadcast the games. Audiences had to appreciate the hard work of Mike Tirico in Paris, who served as a smooth host/traffic cop for 17 consecutive days of afternoon live action, while also anchoring the nightly prime-time shows. For NBC, which in its previous Olympic presentations had famously embargoed all live action for U.S. prime time (Hey, it’s “plausibly live!”), executive producer Molly Solomon led a bold, gigantic move out of the network’s historic comfort zone.
Conventional wisdom when the Games opened was not for daily average audiences of 30 million-plus. By using today’s technologies and platforms, and abandoning some of the caution of their past practices, Comcast/NBC revealed a new playbook for reaching young audiences. We have taken note, and expect others to do so, too. This is just the beginning.
Ed Desser is an expert witness and president of consultancy Desser Sports Media Inc. (www.desser.tv). John Kosner is an investor in digital startups and president of consultancy Kosner Media (www.kosnermedia.com). Together they developed league TV strategy and ran the NBA’s media operations in the ’80s and ’90s.
The NBA’s New Media Deals — First of the Next: John Kosner’s Latest SBJ Column with Ed Desser
Original Article: Sports Business Journal, by John Kosner and Ed Desser, July 29th, 2024
We weren’t surprised that the NBA got “those deals!” — almost triple its current agreements — not when there’s:
Competition. This was the NBA’s first true competitive bidding since 2002, when ABC/ESPN grabbed NBC’s lead package. And, for the first time, there was bidding interest in streaming rights, too. This dynamic played out with the new entrants:
Comcast/NBC will offer the NBA much broader exposure by moving two weeknight games, and substantial playoffs, to NBC broadcast while also using the NBA to drive its Peacock streaming service; and, Comcast’s crucial mother lode, high-speed data business. For Comcast, more sports streaming equals more data demand, and higher-priced broadband packages. Look for additional 4K, sub-second latency, and real-time wagering — all for a price. Comcast can potentially help offset some of its new $2.5 billion annual NBA rights commitment with an adjustment in the subscriber fees it pays for an apparently NBA-less TNT, while making NBC and Peacock more valuable to both distributors and subscribers.
Amazon is mirroring NBC’s NFL/NBA calendar, and brings the league more subscribers today than cable. And it may also move to replace or complement Diamond Sports (and other RSNs) as the hub for local NBA team broadcasts, further enhancing Prime Video’s position as a sports destination.
More being sold. The NBA is adding a third partner for the first time in 40 years (the NFL now has seven) by selling Amazon or WBD one or two nights, In-Season and Play-In Tournaments, Digital League Pass, streaming, and international rights, provided the NBA can ultimately deliver the accepted deal, which may be legally contested by WBD.
The 11-year term. The 2.9x increase is massive, but remember, we’re talking about a total 20-year span from when the NBA’s current deals started and the new ones end. The 2025-26 season will be the NBA’s first major annual rights jump in nine years, and that adjustment was the first quantum increase since 1998, 26 years ago. Deal-over-deal, this fittingly represents about an 11% CAGR, partially a result of the need by challengers to overwhelm incumbent TNT’s matching rights.
The ascendancy of streaming. The NBA has what streamers want — unique, branded, exclusive, and popular programming for eight months of the year, with its biggest and most-watched prime-time, postseason games occurring outside football season. A true churn-buster! It’s crucial to Disney’s streaming platforms, Amazon, and Peacock. In a subscription world, months of content matter! Plus:
Advertising ... for all. The NBA is a major advertising business that attracts a consistently sizable, engaged audience that watches live on specific dates and times — increasingly, the only content advertisers will pay a premium for. This is important for ABC/ESPN, NBC, and TNT. Perfect timing for Amazon, too, which recently introduced ads for all Prime subscribers who don’t elect to pay more, plus there is no opt-out for live, in-game sports ads!
The young demos. The NBA is among the biggest social media sports — its stars are on a first-name basis with young audiences globally, on YouTube, Instagram, and TikTok, where streamers recruit viewers. The NBA is hip, culturally relevant, and skews young, unlike most all linear TV entertainment and news programming. The NBA’s regular-season ratings have maintained, while linear entertainment’s have collapsed. Indeed, the analyst Doug Shapiro makes the point: The most valuable sports rights are gaining at the expense of entertainment content spending.
The outlook
The NBA is the last in the current cycle to finally add an all-digital package. But we also see these NBA deals as the “first of the next” wave, as cable has now crested (e.g., no games for NBC’s USA Network or apparently TNT). Meanwhile, the regional sports business is also challenged:
NBA regular-season games will now be featured in prime time every night on NBC/Peacock, ABC, ESPN, and Prime Video. This is both a massive exposure boost for the league and a management challenge for everyone. Fans complain today that the games are hard to find. For this to work well, the NBA and its players will have to make these games even more compelling, and the NBA must work with its partners to balance new inventory across (at least) three major sales organizations, while making the viewing experience more seamless. Can you say: “NBA App?” In the NBA’s regular season, amazing things happen every night, but it’s hard to predict in which games. Flexibility will be important, as is the broadcasters’ willingness to show the best games, not just the biggest markets. Going forward, Oklahoma City and San Antonio are rising.
The NBA has established a 12-month content calendar with the rise of the WNBA and Summer League. USA Basketball might have snubbed Caitlin Clark (for now), but new partner NBC can be expected to spotlight the NBA and WNBA Dream Teams at the Paris, Los Angeles, and Brisbane Olympics.
We expect that this lineup will soon come with a next-gen TV world feed, inspired by COVID “bubble” learnings.
Our increasingly fragmented media world rewards strong, centrally managed enterprises. The NBA has long been a well-run originator of many of sports’ best practices. That track record matters, too. Relationships are critical, but it’s the people (think Ted Turner, Dick Ebersol, and Mark Lazarus), not just companies, that count.
Finally, whither “Inside the NBA,” one of the best TV shows in sports history — also one of the most valuable non-live-game properties in sports media? Could it move? Might Charles Barkley unretire? Quoting Marv Albert on both: “Yes!”
Our former boss, the visionary David Stern, deserves credit for setting the league on this path decades ago, helping make today’s reset possible 4 1/2 years after his death. These new deals with Disney, Comcast/NBC, and Amazon firmly establish the NBA as the No. 2 U.S. sports media property, only behind the NFL. Is an NFL rights re-opener in five years now inevitable?
Ed Desser is president of consultancy Desser Sports Media Inc. (www.desser.tv). John Kosner is president of consultancy Kosner Media (www.kosnermedia.com). Together they developed league TV strategy and ran the NBA’s media operations in the ’80s and ’90s. Ed negotiated every national TV deal during his tenure from 1982-2005. John participated in most of those negotiations, first at the NBA, and then at ESPN through the current deal.
With Streamers Circling & Reduced Cable Penetration, A New Sports Playbook for Broadcast Network TV: John Kosner’s Latest SBJ Column with Ed Desser
Original Article: Sports Business Journal, by John Kosner and Ed Desser, May 27th, 2024
We started our careers in the early 1980s, a time of “shelf space” scarcity, with just three national commercial broadcast networks. Each carried some major league sports, almost exclusively on weekend afternoons, with only occasional prime-time coverage of crown jewel events such as the World Series, Super Bowl and Olympics. The 1981 NBA Finals were shown late-night, on tape delay! Fox would launch in 1986. ESPN and cable TV were in their infancy, neither well-distributed nor considered a proper host for major events. John held a programming position at CBS, which was the broadcast home of the then-struggling NBA, where Ed worked as head of broadcasting.
Like today, sports content deals then revolved around TV dollars and exposure, but sports divisions were dismissively considered the toy department in their own shops — a less profitable, distant priority behind what mattered: prime-time entertainment, national and local news and daytime soap operas. Led by the NFL, sports ultimately forged such a strong connection with viewers that it dominated all other programming. In 2023, 96 of the top 100 TV programs were sports. This performance also has been aided by Nielsen’s inclusion of out-of-home viewing, which disproportionately favors live games. Exempting sports, network average prime-time adult 18-49 ratings are now down to under a half a ratings point each.
We are advocates for best practices, constantly searching for incremental sports media value. With streamers circling and reduced cable penetration, it’s time to rethink the playbook for network TV sports:
With the exception of NFL (and some events on lesser-viewed Friday/Saturday nights), broadcast sports continues to air mostly noon-6 p.m. on weekend afternoons (9 a.m.-3 p.m. Pacific), still “protecting” local/network news, access shows like “Jeopardy,” and of course, prime-time entertainment programs, with few non-playoff sports on weeknights. Any financial analysis of sports in prime time requires consideration of entertainment programming’s “preemptive impact.”
Sports properties are valued by viewership and must look to maximize that. On the second and third Sundays of the NBA Playoffs, ABC aired a spectacular 47-point performance from Jalen Brunson and then a Game 7 between Cleveland and Orlando at 1 p.m. ET (10 a.m. PT), just as spring weather beckoned everyone outside. Last Sunday’s Knicks-Pacers Game 7 finished around 6 p.m. ET, when we believe it should have started, providing no lead-in for TNT’s Wolves-Nuggets Game 7. Those games had the most national appeal of anything on ABC’s schedule and would have drawn 50%-100% larger audiences had they been at 5:30 or 8 p.m. ET. NBA ratings were down 12% for the first two rounds. Exposure matters — especially to showcase emerging teams and stars to larger audiences. The 5:30 p.m. ET weekend time period has not been used since NBC lost NBA rights 22 years ago. Putting NBA Playoffs in that slot would have also given ABC’s “American Idol” an enormous lead-in.
We made the same point recently about ABC airing Caitlin Clark’s record NCAA women’s basketball championship game at 3 p.m. ET, not in prime time. The men’s championship also misses an opportunity by starting on Thursday afternoon, and has no Sunday CBS prime-time windows, still “protecting” what was once the top prime-time show franchise in a bygone television era, “60 Minutes” (though still among CBS’s highest-rated). Meanwhile, ABC aired the NFL Draft on a Thursday night, helping it draw 12.1 million viewers.
In 2019, when Fox sold its studio and announced a recasting of its broadcast network around sports and events — NFL (at the time) on Thursday, WWE on Friday, and college football on Saturday night — it nevertheless hired a new entertainment programming executive. Why, when Fox programmed just nine remaining weekly prime-time entertainment hours (versus 22 for the other networks)? Instead, it could have easily filled those hours with sports it owned, including MLB and college basketball. Most broadcast networks continue to operate on what we believe is ’80s-dated inertia, before widespread cable, VCRs or streaming, when they collectively held a 90% prime-time audience share!
To their credit (and sports’ benefit), NBC is more aggressive. Its use of the Olympic rings to brand the network has set the standard for sports/TV integration. The Kentucky Derby post time was traditionally 5:40 p.m. ET. Earlier this month, NBC aired the 150th running at 7:02 p.m. ET, drawing 20.1 million viewers. The originators of “Breakfast at Wimbledon,” NBC has established weekend morning network coverage of the Premier League, helping to elevate international football. Look for the NFL to program weekly Sunday games from Europe, 9:30 a.m.-1 p.m. ET, by the end of the decade. Should NBC reclaim the NBA from Warner Bros. Discovery, it would mark the first time a major cable package migrated back to broadcast. It won’t be the last.
It’s not that NBC faces any issues different from its competitors, but it does think differently, highly valuing the power of live sports. When NBC pioneered the early weekend evening 5:30-8 p.m. ET NBA window (home to many classic Michael Jordan and Kobe Bryant games), it helped address potential preemptions by offering its local stations a highly rated and sellable news insert at halftime (similar to what the NFL has done in its late Sunday afternoon window).
The alchemy of sports media deals always involves reach and revenue. As traditional pay-TV subscribers shrink, broadcast networks with theoretical 100% reach are even more in vogue for rights holders. Sports dominated the 2024 upfronts — even for Netflix. It’s perfect timing for new network thinking, delivering the best games to the biggest audiences.
Ed Desser is president of consultancy Desser Sports Media Inc. (www.desser.tv). John Kosner is president of consultancy Kosner Media (www.kosnermedia.com). Together they developed league TV strategy and ran the NBA’s media operations in the ’80s and ’90s.
Time to Combine The Final Four. John Kosner’s Latest SBJ Column With Ed Desser
Original Article: Sports Business Journal, by John Kosner and Ed Desser, April 15th, 2024
In the 2021 NCAA Gender Equity Media & Sponsorship Analysis, we wrote that the Men’s and Women’s Division I Basketball Final Fours should be staged at a single location on the same weekend, starting ideally in 2023. Imagine if the NCAA had done so! Last year, the epic matchups of Iowa with Caitlin Clark against undefeated South Carolina and then eventual champion would likely have packed Houston’s NRG Stadium! The 2024 women’s final outrated the men’s by a previously unthinkable 26%!
As to the debate about whether to expand significantly the number of teams playing in the men’s tournament ...
We say: “No!”
Sports media is undergoing historic change. If you’re not constantly improving, you’re falling behind. For Tier 1 properties, the key strategy is often expansion, building upon what’s already there, primarily in the postseason: NFL playoffs have gone from eight to 14 teams; MLB from four to 12; College Football Playoff from four to 12/14 schools; the NBA has added both Play-In and In-Season tournaments; the World Cup will have 50% more teams (48) in 2026.
But expansion is not the only way to improve. The NCAA men’s and women’s basketball championships are already almost perfectly designed:
True national championships.
All single-elimination games.
A near-ideal combination of automatic qualifiers covering all D-I basketball conferences, plus an appropriate number of at-large schools (Blue bloods and Cinderellas!).
So perfect that March is the busiest month for vasectomies … really!
To increase the value of their two basketball crown jewels, the NCAA and its schools should focus on strategically improving what they already have — not diluting it further. While beautifully constructed, the men’s and women’s tournaments, as media properties, have barely changed in decades. It’s high time:
Let’s start with the beginning. The first two full days of the men’s tournament are a national holiday for many sports fans, but who can take Thursday/Friday off? The NBA playoffs start on Saturday/Sunday, enabling every game to be nationally televised to the biggest possible audiences. Open the men’s tournament on Saturday/Sunday — up to eight games per day could be scheduled unopposed! Then use Monday/Tuesday late afternoons and evenings for the second round. We also suggest using home arenas for both tournaments for the first weekend — cutting down on travel, ensuring a great atmosphere for TV and rewarding the excellent play of higher seeds during the regular season.
Update the TV schedule. Expand distribution, improve time periods. Would the NFL construct a playoff schedule with no Sunday night network TV windows whatsoever? Of course not. The Duke-N.C. State regional final drew 15.1 million on CBS, Sunday at 5:05 p.m. ET. What would it have done at 8 p.m. ET? The South Carolina-Iowa rematch on ESPN drew 18.7 million and ended just after 5 p.m. ET. How about if it started on ABC at 8:30 p.m.? All games should be elevated into the best, not best-available, time slots. Everyone wins! With the plethora of networks available between CBS, WBD and ABC/ESPN, game times could be coordinated and staggered to better effect. Being more aggressive will create a virtuous cycle, yielding more rating points and resulting ad dollars and higher rights fees starting in 2033.
Truly cross-promote. The NCAA mandates that CBS/WBD and ESPN modestly cross-promote the respective tournaments. But when games are live simultaneously, announcers directing fans to NCAA.com for schedules is not ideal. The NCAA now uses “March Madness” branding for both events; it should include the women in its March Madness Live app, too.
Combine the Final Fours! Big East Commissioner Val Ackerman outlined this idea in her 2013 white paper, and last month Casey Wasserman championed it on Bill Simmons’ podcast. Currently, the pieces fit and could remain: The women play Friday/Sunday and the men Saturday/Monday. But the NCAA could also create a Super Saturday with all four semifinals and a Monday night championship doubleheader with prime-time slots for both. With CBS/Turner, it could also update its sponsor sales approach, permitting devoted women’s championship sponsors to buy stand-alone packages without buying through the men’s overhang. In her white paper, Ackerman wrote that a combined Final Four would “create an unparalleled college basketball showcase that would bring together the best players and coaches in both sports and, importantly, allow the women’s tournament to avail itself of the presence of sponsors, media representatives and important guests who typically bypass” the women’s final weekend in favor of the men’s. The women’s leaders aren’t “in the room where it happens.” Let’s change that! The men and women could also play in the same venue, share hotel allotments (which any Super Bowl city can manage), and create a Basketball Super Bowl!
Reasons we feel negatively about championship expansion:
The broadcasters won’t pay materially extra for more early-round games in either tournament.
There’s limited room to expand the men’s tournament — one week later is the Masters, one week earlier are most of the conference championships (Idea: Use the NIT, not the “First Four,” to qualify the final slots).
Any change in the automatic qualifiers negatively affects the appeal of the tournaments. This year, the biggest men’s stories early were Oakland, Yale and James Madison. But in other years it’s been Saint Peter’s, Cornell and Loyola (Chicago).
Yes, the expanded Big Ten and SEC want to maintain the percentage of their schools making the tournaments, but not at the expense of optimal tournament design.
NCAA leadership considered our 2021 combined Final Four recommendation but then selected separate locations through 2031. That’s a big miss. Hopefully the leaders of college sports will reconsider. There’s no better time than now.
Ed Desser is president of consultancy Desser Sports Media Inc. (www.desser.tv). John Kosner is president of consultancy Kosner Media (www.kosnermedia.com). Together they developed league TV strategy and ran the NBA’s media operations in the ’80s and ’90s.
The New Dilemma in Sports Media. John Kosner’s Latest SBJ Column With Ed Desser
Original Article: Sports Business Journal, by John Kosner and Ed Desser, March 25th, 2024
For rights owners, negotiating sports media agreements was never easy, but it was straightforward, pre-COVID:
Estimate rights for fair market value.
Identify at least two interested linear networks with capacity.
Determine which will provide the best consideration package, optimal schedule and quality production.
Negotiate and close.
If shelf space existed and the money was right, the sport would get both the largest potential audience on established platforms and revenue, reaching substantially all sports fans. Plus, since almost everyone (100 million homes) subscribed to cable TV,non-sports fans essentially subsidized fans and sports programming seemed practically free. Live sports emerged as the most attractive, valuable form of entertainment, becoming the linchpin of the cable bundle/sports marriage. Here are a few things to keep in mind:
Today, sports retains its unique competitive advantages, but it’s hard to recognize the media business:
Just about 40% of homes still subscribe to most linear cable sports networks, and RSN re-tiering is lowering that while further increasing fan costs.
Cable affiliate revenue is declining. Lost revenue from disconnects now exceeds the price increases networks and distributors can pass on to remaining subscribers — shrinking network margins and the available funds to pay for sports.
While broadcast stations can technically reach all homes in a market, just two-thirds of viewers actually have access (15% via antennas). Students recently told John that they thought they had to subscribe to Paramount+ to watch a recent NFL playoff game.
Typical linear network audiences are a small fraction of before. Shockingly, the average combined four-network 18-49 adult prime-time entertainment audience is down to just 1.6 rating points (from mid-40s) — a mere 0.4 per network!
Thus, these once-mighty linear channels no longer provide the large, assured audiences, lead-ins, and promotional value for sports they did a decade ago.
Meanwhile, streaming services, social media platforms and video games each generate more total screen time than all linear TV networks combined.
The viewing habits of those under 30 do not resemble their elders. Most simply don’t watch linear network programming, let alone full games, with the same frequency. It’s the first generation watching pirated sports feeds.
Input A is now Input B. Most viewers’ default video programming setting is streaming, not “live” linear TV. New strategies are needed to engage younger fans.
Today, every event, on every network, competes for audience not just against each other (like the “old” days) but also against every viewer’s highly curated, and practically unlimited, SVOD favorites list of movies and TV shows, culled from deep libraries of all content ever produced. Younger audiences also choose from an endless supply of free, ad-supported short-form videos on social media networks, YouTube, a host of video games or play uncapped in free virtual worlds like Fortnite or Roblox. Even top-tier sports struggle to draw large audiences across attractive demographics to generate growing media rights value in this unprecedented, hyper-competitive environment. Indeed, only the weekly ritual of fall football appears safe — so far!
To grow revenue and fan bases, all sports media properties must think differently:
If you’re not a top dog (SBJ, Jan. 29, 2024), look out! Expect your media model and rights revenues to be challenged.
Just licensing your events to a linear network alone, and hoping to attract a large fandom, is unrealistic and no longer a viable strategy. A single vanilla feed is unlikely to satisfy an increasingly diverse fan base. Instead, you will need multiple platforms and a variety of targeted products.
Researching your fan base is a must. (not just relying on Nielsen or syndicated services). Do a SWOT analysis on your media business. How many are willing to pay for your content? How much are sponsors willing to support you? How and where do your viewers spend their time? How do they define fandom? Do they bet on your sport? Where are your new opportunities?
Multiple media relationships/platforms will become the norm. “All means and media hereafter developed” grants are mostly behind us. Options are proliferating: linear (broadcast and/or cable), subscription, 4K, FAST channels, channel stores, viewing parties, social, gaming/gambling/sub-second latency, short-form/highlights, radio/podcasting/audio, data products, merch and collectibles, even super-high-resolution “back to the future” closed circuit.
Shorter-term agreements are in. The NFL deals run through 2033 but the league has an out after 2029. The 10-year WWE agreement includes both a five-year out and 10-year extension for Netflix. The NCAA “other” championships deal is now eight years, down from the previous 12, smartly co-terminus with the men’s basketball championship. Leverage has its benefits.
What is your direct-to-consumer model? Even if you don’t want to go it alone, it’s critical to know what pricing and revenues are possible, and how much it would cost to operate. Have a production, sales, and fulfillment plan in place, should it be needed. Some small properties have surprisingly sizable DTC audiences. This knowledge is a useful backstop for negotiations.
Change is already underway:
This is the second season of MLS’s exclusive deal with Apple.
The Suns/Golden Knights/Jazz have moved their games from RSNs to OTA and DTC.
NASCAR once had two media packages; now it has five.
ESPN/Fox/WBD announced a new sports streaming joint venture.
The CFP is expanding to 12 … or is it 14 schools?
Seismic change has hit the sports media world. We’re not going back. Be prepared for a variety of alternatives, some incremental, which may look quite different. For licensors, there are new buyers, but their priorities might be different. In an era of increasing tumult, it’s always wise to plan ahead.
Ed Desser is president of consultancy Desser Sports Media Inc. (www.desser.tv). John Kosner is president of consultancy Kosner Media (www.kosnermedia.com). Together they developed league TV strategy and ran the NBA’s media operations in the ’80s and ’90s.
Are All Sports Rights Fees Flattening? John Kosner’s Latest SBJ Column With Ed Desser
Original Article: Sports Business Journal, by John Kosner and Ed Desser, January 29th, 2024
Throughout our careers, premium sports properties have resembled growth stocks: rights fees headed skyward at double-digit rates. Sports perfectly exploited pay TV’s dual-revenue-stream-powered boom. National broadcast network deals grew, supported by station retransmission consent fees; powerhouse cable networks developed, propelled by affiliate revenue. Meanwhile, local pro team agreements drove near-ubiquitous distribution of RSNs. Sports advertising’s rising tide lifted all boats.
As we chronicled (SBJ, Dec. 11, 2023), the industry has entered a daunting new frontier. Recently, the Premier League, WWE, and NASCAR announced media deals more in line with inflation than growing at the previously hyper-inflationary levels.
Are all rights fees flattening, including for big bellwethers? We think not.
There are several factors influencing rights fees (and we mean cash rights fees, not production offsets or marketing commitments):
Attractiveness of the package: What’s the market’s perception? Formula One had to offer ESPN sweetheart terms in 2018 just to get desired exposure. By 2020, it got a small rights fee. Then with an assist from Netflix’s “Drive to Survive,” competition yielded $85 million annually from ESPN. F1 improved its story — and its market value. But what have you done for me lately? In 2023, F1 ratings were down 8%.
Time since last reset: New agreement reporting tends to compare average annual package prices (AAV), deal-over-deal. However, it is the step up from the final year of the previous deal to the first year of the new which usually counts. After that, it’s typically yearly cost-of-living increases. Thus, NASCAR, which ended 12-year Fox/NBC agreements, appeared to gain a bigger increase than the Premier League, whose last NBC deal ran only three seasons.
Has the package been under-market? Sometimes a sport and its media rights package get out of sync. Conditions at negotiating time matter. NASCAR saw huge rights fee upticks in previous deals, but then its viewership lagged (in part because it placed more races on lower-rated pay TV networks versus broadcast to generate more money). ESPN’s 12-year NCAA “other” championships deal was notably underpriced, and the explosive growth of the NCAA women’s basketball championship drove the recently announced, $920 million, 8-year-agreement.
Demographics (younger/older; income levels; geography): No one doubts the entertainment appeal of WWE, which helped drive last week’s Netflix deal, but its audience composition is not as attractive as other traditional sports, which draw the upscale male viewers that networks and their advertisers covet.
Demand: The NCAA “other” championships offer both tremendous volume and quality. But, realistically, how many bidders could handle its 2,200-hour tonnage, requirements for broad distribution, and event production? Answer: Only ESPN. Thus, when the NCAA determined to keep the championships package together (and not bid the women’s basketball championship separately) it became inevitable that ESPN would clinch the deal. Multiple networks are invested in college football, but ESPN has the incumbent’s advantage with the College Football Playoff — only it can pay more rights into the remaining two seasons of the current deal. ESPN appreciates how the CFP helps drive better ad sales throughout the five-month season, a competitive halo. On the other hand, the financial performance (and debt load) of media companies matters too. Paramount (CBS) and Warner Bros. Discovery (Turner) might aspire to be aggressive buyers, but their balance sheets constrain them.
Trend (where have audiences and sponsor interest gone from the last negotiation?): The standalone CFP has had an uneven ratings performance, in part because its participants have tended to come from the Southeast, Southwest and the 166 miles separating Ohio State and Michigan. However, the 2023 and 2024 semifinals were thrilling and Michigan’s championship run drew 27 million and 25 million viewers respectively. College football is the No. 2 sport in the U.S.
Nature of package: The NBA season is practically a year-round affair, with a seven-month pre/regular season, a two-month postseason, then the draft, summer ball, and WNBA in between. In a direct-to-consumer world, where months matter, that’s major churn mitigation. Additionally, NBA betting volumes already rival the NFL (team bets on the Celtics, Nuggets and Lakers were three of Action Network’s four most-tracked in 2023). The Premier League not only provides compelling live weekend morning and afternoon matches for NBC, but also it makes Peacock a must-have for international football fanatics. Savvy leagues change the partners, size, and elements of packages to adapt to the marketplace (e.g., the NFL moving Sunday Ticket to YouTube and adding influencers).
Tentpole property: The NCAA women’s basketball championship only covers three weeks, but it has emerged as ESPN’s leading event between January’s CFP and April’s Masters. The CFP already dominates its current windows and is set to expand by eight more.
Cord-cutting and a softer advertising environment aside, we expect the NBA to book a significant increase in its rights (as the NFL did) since it checks all the above boxes (perception, nine years since the last deal, young demos, high-demand property, gambling attraction, fairly stable audiences in a declining trend marketplace, significant interest from sponsors and fans, nine months of programming; and, certainly, a tentpole during its spring playoffs).
If ESPN closes its reported six-year extension, the CFP deal will also show a nice increase. Ironically, the CFP’s biggest challenge is that the NFL sucks much of the oxygen … and attractive time slots … out of the system. Twenty-three million viewers for the Peacock playoff game is just the latest example.
The big are getting bigger. CFP and NBA scores mean a lot less money left for everyone else. That’s the new reality of sports media: Still an up market — for a few.
Ed Desser is president of consultancy Desser Sports Media Inc. (www.desser.tv). John Kosner is president of consultancy Kosner Media (www.kosnermedia.com). Together they developed league TV strategy and ran the NBA’s media operations in the ’80s and ’90s.
Crossing The Sports Media Rubicon — One Year Later. John Kosner’s Latest SBJ Column with Ed Desser
Original Article: Sports Business Journal, by Ed Desser and John Kosner, December 11th, 2023
Sports media “crossed the Rubicon,” a point of no return, with last year’s exclusive Amazon NFL Thursday streaming deal (SBJ, Dec. 5, 2022). Our May 22, 2023, SBJ column noted more tectonic changes that had taken place early in the year. And Amazon Prime Video’s first NFL Black Friday game provided a fitting bookend to a year of increasingly interconnected, furiously changing events … or perhaps it came with news that Mark Cuban is selling a majority stake in his beloved Mavericks?
Witness all that happened in 2023:
On Black Friday, Amazon sported dynamic ad insertion, live commerce with an NFL shield QR code, AI overlays, multiple synced 4K feeds (including targeted “altcasts” — e.g., Dude Perfect), generating an audience seven years younger than the other NFL carriers. Amazon’s bold reinvention of sports (now adding exclusive NASCAR Cup races too) reminds us of Fox’s 1994 NFL coverage debut.
Thus, it’s not coincidental that Apple (with MLS … and Lionel Messi!) and Google/YouTube (with NFL Sunday Ticket) finally staked out their exclusive positions in sports media. Among other things, Google wanted NFL IP for its 15 million YouTube creators, an entirely new criteria for rights negotiations.
On Nov. 14, Netflix got into the act … kind of … streaming a live celebrity golf event. More profoundly, SBJ’s John Ourand reported that the world’s leading streamer is interested in the NBA’s In-Season Tournament, and Amazon wants NBA playoffs. Are these digital giants aggressive rights buyers or … more likely, eager to use their vast user bases and online video stores to be tax collectors for fans and rights holders searching for each other in an increasingly fragmented landscape? Certainly, they’re all after the growing pie of sports TV advertising, the last bastion of scale audience for marketers available simultaneously and universally across all age, ethnic and economic demos. On Nov. 19, Disney’s Hotstar drew a record 59 million concurrent viewers for its free coverage of the Cricket World Cup.
In July, Nielsen ominously reported a first: Broadcast and cable TV dropped below 50% of total TV usage despite its addition of out-of-home measurement, helping goose sports TV ratings (by 40% for NFL Thanksgiving). Meanwhile, Amazon and Netflix each have more subscribers than cable (almost as many homes as broadcast nets). Still …
Charter shocked us by dropping ESPN and ABC in several markets, including New York, during the U.S. Open and at the start of college football season, yet ultimately hewing to the old script by settling for a new deal by the debut of “Monday Night Football,” giving it access to certain Disney streaming assets but maintaining ESPN’s packaging. Nonetheless …
Cord-cutting accelerated as higher prices and lower quality hurt traditional pay TV ( Comcast lost 12% of its video subscribers this year, 490,000 last quarter).
With traditional linear pay TV (for four decades, sport’s bank and megaphone) in jeopardy, rights holders and buyers wonder where the money and exposure is going to come from now (hint: almost all leagues now have exclusive streaming packages).
The fallout was swift and brutal:
The 108-year-old Pac-12 conference imploded in August; Pacific coast mainstays Cal and Stanford decamped to the Atlantic Coast Conference, and rendered the Rose Bowl collateral damage.
Bankrupt Diamond Sports, and the RSN economic model (other than major market networks) teetered with MLB retaking local rights for the Padres and Diamondbacks. WBD threw in the towel on its four RSNs. The Suns, Jazz, Coyotes and Golden Knights moved to a combination of over-the-air (with multicast and low power) TV stations and streaming.
Will Rubicon 2024 mark the end of the 60-plus year MLB, NBA, NHL local broadcast model?
Enter Saudi riches. The kingdom invested over $100 million into MMA upstart PFL and then staged the stunning Tyson Fury-Francis Ngannou boxing/MMA crossover fight. In June, they signed soccer megastar Cristiano Ronaldo to a reported $220 million contract, elevating the Saudi Pro League. Now they are set to become FIFA’s biggest sponsor ($1 billion annually with Aramco) and likely 2034 FIFA World Cup host. Most shocking, LIV Golf and the PGA Tour agreed to agree to stop fighting in court and form a joint venture on the course and boardroom.
LIV’s first rights holder, the CW broadcast “netlet,” added the ACC, NASCAR Xfinity, “Inside the NFL,” WWE’s NXT and now has more live sports hours than any broadcaster other than the Big Four.
Just as the 1999 Women’s World Cup put U.S. women’s soccer on the map, so did last summer’s WWC for the rest of the world. Spain won but England’s Lionesses almost stole the show. Meanwhile, the NWSL forged new agreements with CBS, ESPN, Amazon and Scripps.
The NCAA Women’s Basketball Championship Final drew a stunning 9.9 record rating on an April Sunday afternoon on ABC. Holy NIL! Caitlin Clark now has her own Allstate commercial! The WNBA is the ultimate beneficiary.
Hagiographic athlete “documentaries” and all-access series flooded streaming services. Today, sports is practically “The Truman Show.” It’s meta. Want to see the actual “behind-the-scenes” moment when golf pros found out about the proposed PGA Tour-LIV-DP World Tour merger? Season 2 of Netflix’s “Full Swing” was shooting then!
At the recent SBJ Media Innovators conference, our former NBA colleague Bill Koenig said, “What’s exciting — and a bit daunting — is I think that over the next five years, you’ll see more change than you’ve seen in the last 30 years in media.”
Ed Desser is president of consultancy Desser Sports Media Inc. (www.desser.tv). John Kosner is president of consultancy Kosner Media (www.kosnermedia.com). Together they developed league TV strategy and ran the NBA’s media operations in the ’80s and ’90s.
What Should College Football Do Now? John Kosner’s Latest SBJ Column with Ed Desser
Original Article: Sports Business Journal, by John Kosner and Ed Desser, October 16th, 2023
The 2023 college football season began tumultuously: The Pac-12 disintegrated. Two of its Pacific Coast schools, Stanford and Cal, joined the … Atlantic Coast Conference. Another, Colorado — featuring head coach Deion Sanders — became the TV address with two TV-friendly 10 a.m. local time kickoffs. In a Sept. 23 New York Times op-ed, Jordan Acker, a University of Michigan regent, wrote: “The recent creation of new national super conferences … is about one thing: getting the biggest television audience — and the biggest payout.
Agreed.
We do not opine here on the proper economic model for colleges, though we hope for an economically fair one that provides athletes with a voice. Since generating more revenue is clearly crucial, our decades of pro league and major sports network experience suggests that college administrators consider these key changes that would create more media value for the key driver, football:
Expand the regular season. College football is the No. 2 sport in America. The NFL (No. 1) has expanded to 17 regular-season games from just 12 in 1960. College football should add at least two additional regular-season weeks and play from Labor Day weekend into the middle of December, a traditionally dead time for TV networks, but one with high “homes using TV” levels. Wear and tear on college football players is obviously a factor. But FBS schools have 85 scholarships (and now NIL) for a reason. The NFL reduced preseason games and year-round workouts as part of its longer season; colleges can too, beginning with spring ball commitments, and by …
Reconceiving the bowl games. The bowls no longer serve their original purpose. The six big bowls in rotation could remain as sites for the second and third weeks of CFP games. The Rose Bowl could be re-imagined as a Big Ten Championship location in late December and/or a new stand-alone Jan. 1 “Future Bowl” game featuring the best two teams not in the CFP. Eliminate the lesser bowls featuring two .500 teams.
The two biggest rivals should play home and home. Yes, that happens in college basketball and baseball (both shorter seasons) and is perhaps the secret of NFL divisional play. “Pay for” games, where smaller, undermanned schools take a big check to get walloped at a Power Five school, might be good for one institution’s bottom line and the other’s record, but lopsided games do little for media value or fan engagement. What fans want is traditional rivalry games, whether it’s Ohio State-Michigan, Texas-Oklahoma, USC-UCLA, Army-Navy or Alabama-Auburn. Let’s have more of them! We’d use the two added weeks to make sure all longtime rivalries remain regardless of conference changes — such as Oklahoma vs. Oklahoma State and USC vs. Stanford — and perhaps bring others back, like Penn State vs. Pitt. We know that many schools have their schedules set 20 years into the future, but: (1) No games are currently scheduled for the first two weeks of December other than the conference championships (and Army-Navy); and (2) Money talks, such as the next CFP and conference TV deals.
Expand the weekend schedule instead of the weekdays. We suggest more games on Fridays — not just nights but afternoons too, given recent work-from-home trends. And games on Sundays as well. Yes, the NFL is a ratings juggernaut, but NFL games bring more football fans to the set and that expands audience, which can find alternatives especially if college games are strategically scheduled in windows before or after NFL games of local interest. Right now, all four broadcast networks carry college football games at the same time on Saturday afternoons. That demonstrates the sport’s unique appeal but is counterproductive to growing audiences. Tuesday and Wednesday nights are neither fan- nor school-friendly. The NFL expanded to Thursday and Monday nights. There’s no reason colleges shouldn’t program Friday through Sunday.
Spread the times to create a fifth national TV window. We mentioned Coach Prime playing 10 a.m. games to provide added unopposed exposure. Why not work together to have a regular early Saturday morning time slot? The Premier League has used that to great effect on NBC on Saturday and Sunday mornings. Besides creating five Saturday time slots, we strongly favor …
Shortening the games. College football has drifted into the 3½-hour territory … yes, driven by TV. All sports must trim down. Go further on the 2023 rules changes and use some of the NFL’s adjustments to reduce to three hours. Shorten halftime below 15 minutes (or the minimum to accommodate both bands!). Have fewer, longer timeouts. Manage the clock. This could even create room for an occasional sixth 9 p.m. PT “Midnight Madness” slot!
Create a Saturday “Red Zone.” Saturdays already resemble NFL Sunday Ticket, with three times the simultaneous games across a dozen channels, in double the number of time slots. The power conferences and their broadcast partners should team up to reward fans — creating an added home position to funnel viewers (and bettors) into hot games in progress. It could be a Fox/ESPN (and perhaps others) joint venture, and a new way to generate more revenue and interest out of the existing product base.
Today, you must earn your fans’ time, money, attention and hearts, and constantly be improving your TV offerings. Otherwise, you’re falling behind and possibly into trouble. Even if you’re the second biggest sport in the country.
Ed Desser is an expert witness and president of consultancy Desser Sports Media Inc. (www.desser.tv). John Kosner is president of consultancy Kosner Media (www.kosnermedia.com). Together they developed league TV strategy and ran the NBA’s media operations in the ’80s and ’90s.
Is it “Back to the Future” in Local TV Sports? John Kosner’s Latest SBJ Column with Ed Desser
Original Article: Sports Business Journal, by John Kosner and Ed Desser, September 11th, 2023
To paraphrase Mark Twain, the death of local sports TV has been greatly exaggerated. Yes, RSNs are challenged, and teams now must consider a range of alternatives from over-the-air broadcast to streaming. However, for most sports fans, local coverage of major league pro teams is still their passion. On a relative basis, it’s never mattered more. Looking forward, consider:
Regional sports networks are still the place where sports fans virtually gather. They are predictable, always-on, hometown destinations, synonymous with local baseball, basketball and hockey, as well as pre/postgame and in-depth, behind-the-scenes content. RSNs still generate wide exposure in most markets, and as “dual-revenue stream” businesses (subscriber fees plus advertising) still generate more revenue than most alternatives. Many RSNs are frequently the highest-rated prime-time channels in their markets. However, RSN revenue and audiences, like cable in general, are shrinking and aging; and some MVPDs either no longer carry the networks or provide smaller penetration. They are now just part of a solution in a broader universe of team options.
Local broadcast stations are back as destinations for some teams. The Suns, Jazz and Golden Knights (all dominant teams in smaller to midsize TV markets) are switching to broadcast from RSNs in 2023-24. Their OTA carriers (Gray, Sinclair and Scripps, respectively) serve an entire metropolitan area via a single feed, and can generate more ad revenue to support the rights than any alternative. However, local TV no longer has the reach it once did. About a third of homes no longer receive their local broadcast channels — even with potential access via antenna, cable, satellite, or streaming. The promotional and lead-in audience that OTA delivers also represents just a small fraction of what once was. Simply placing games on a station no longer provides the mass exposure that teams crave. However, the audiences stations have lost make local sports rights relatively more important to them, possibly leading to higher retrans payments, giving teams negotiation leverage.
Streaming is ascendant. Netflix, Prime Video, Peacock, Apple TV, Paramount+, Disney+, Max and YouTube have revolutionized how Americans consume most types of video entertainment, and have begun to do so with sports as well. Most soccer is now streamed ( MLS exclusively); Thursday NFL is on Prime Video; and MLB has packages on Peacock and Apple. In addition, streaming offers customization and personalization that fans will grow to expect. But today, the majority of major sports content remains on traditional linear channels, and streaming still suffers annoying latency (game action lags score apps). The Diamond RSNs, MSG, Marquee and NESN have begun a transition game, offering a direct-to-consumer option in addition to the traditional cable/satellite feed. Some of the Diamond (Bally Sports) RSNs already deliver a substantial number of unduplicated homes via their DTC offerings. If a team puts most of its games on free TV, it should view pay streaming as attractive incremental reach for the digitally savvy, but not necessarily as a big net revenue generator, because free is potent competition for pay.
Direct-to-consumer packages are a tough business. Teams/schools may also choose to go directly to their fans (DTC). They can produce a virtual season ticket (and PPV), further deepening direct relationships with their fans (avoiding the middlemen), building a subscriber base. However, this adds risk and much additional expense, both for the team to produce, sell and execute, and for fans used to getting games “free” on cable, and now faced with myriad other SVOD subscription options.
Your league might be your partner. NBA League Pass, MLB Extra Innings, and NHL Center Ice, along with their respective national channels, can provide infrastructure and packaging options to enable teams to market a local package directly to their fans, combined with national assets. While none has yet been announced, look for MLB to lead here, as it has already obtained rights to Padres and Diamondbacks games; others could soon follow.
Is this the moment for independent streamers? There are dedicated sports streaming operators, such as Flo Sports (which carries lots of Olympic sports) and DAZN, which features boxing. Neither has yet entered major league U.S. sports, but they have shown interest.
What are the economics? A well-distributed RSN can still afford to pay the largest rights fees because of its dual revenue streams and fairly wide distribution. Even in their diminished state, RSNs will still be the preferred choice for many teams for years. However, broadcast is in a position to provide wider exposure. In theory, all homes can receive OTA-TV. The digital signal quality is better than ever. But relying on ads alone will not provide the same return for most teams. That’s the reason teams originally abandoned OTA. Will offering the majority of home games on free TV affect the gate? Streaming, if done as an extension of broadcast or RSN, can supplement the audiences and reach some younger fans that don’t subscribe to cable but who do have data service. But pricing (above zero) becomes the potential gating factor.
For pro teams, the RSNs were a lucrative “set it and forget it.” Like classic full-season tickets, that era is over. Now, the hard work begins at home. True community building is necessary in order to engage and manage a modern fan base to match or exceed previous revenue. The good news is that level of digital and physical interaction is exactly what your fans want.
Ed Desser is an expert witness and president of Desser Sports Media Inc. (www.desser.tv). John Kosner is president of consultancy Kosner Media (www.kosnermedia.com) Together they developed league TV strategy and ran the NBA’s media operations in the ’80s and ’90s.
“Crossing the Sports Media Rubicon II” - John Kosner’s Latest SBJ Column with Ed Desser
Original Article: Sports Business Journal, by John Kosner and Ed Desser, May 22nd, 2023
In December, we wrote how Amazon’s exclusive NFL launch signified the sports media business’ “crossing the Rubicon” moment (SBJ, Dec. 5, 2022) — a symbolic point of no return for the industry. That column generated many thoughtful responses. In today’s second installment, we share six early post-Rubicon trends we’re seeing:
1. Women’s Sports Events are Booming. Fifty years ago, the NCAA moved the men’s basketball championship to its current Saturday/Monday prime-time schedule; Bill Walton led UCLA to its seventh consecutive national championship on remarkable 21-of-22 shooting. The Final Four phenomenon was born. This year, Iowa’s Caitlin Clark and LSU’s Angel Reese electrified the nation in the semis (generating historic audiences) and then the women’s championship game drew 9.9 million viewers on Sunday afternoon. Expect to see additional prime-time, regular-season women’s games. The market is hot for women’s events (like the FIFA Women’s World Cup in July with 29 Fox broadcast windows, five in prime time). It will take a bit longer for the pro leagues, although Clark, Reese and Paige Bueckers augur well for the WNBA.
2. YouTube TV’s NFL Sunday Ticket. After almost 30 years, Sunday Ticket is moving from traditional MVPD to virtual MVPD YouTube TV and its streaming platform. No longer will ST subscribers have to be linear subs (watch DirecTV’s 2023 numbers!), as YouTubeTV will also sell ST à la carte (easily paired with an off-air antenna providing most NFL games). YouTube’s moves increase the pool of potential Sunday Ticket subs by millions, to anyone with broadband. Now all three tech majors have an exclusive, significant, formerly linear, sports property. The addition of NFL IP will also bolster Google’s Creator program, a new rights grant that matters. Indeed, it’s now all about the …
3. Data. YouTube’s opportunity to grow is not just theoretical: Google knows our search history, what we watch on YouTube and other information from our Gmail (really!). As Apple sells MLS Season Pass, it knows the apps we download, the in-app purchases we make, the gear we use, and our credit card. Then there’s Amazon’s first: targeted ads in NFL telecasts. Per former IAB CEO Randy Rothenberg: “Amazon owns all three legs of the [sales] attribution stool: (1) transactions at scale, (2) product search function at scale, and (3) scaling media distribution (120 million+ Amazon Prime Video viewers) … [making it a] self-contained attribution machine that no one else currently can match.” Essentially, Amazon can correlate its actual sales with advertising on its “TNF” games, and potentially any ad-supported video it offers, including Twitch. Are rights holders properly valuing their content when they cede ownership of this data?
- Amazon is propped up by “three legs” of the sales stool: transactions at scale, product search function and media distribution.
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4. The CW Network. The CW Network “weblet” recently signed on to carry LIV Golf. Thirty-five years after the launch of the NFL on Fox comes a new over-the-air player in live weekend sports TV. Regardless of how well The CW and LIV do together, there is now potentially another several hundred hours of weekend afternoon shelf space available for live sports content. Don’t expect The CW to pay out rich rights fees, or compete directly with the iconic legacy linear networks for top programming. However, we do see The CW as an emerging new target for those sports properties that are willing to pay for national broadcast reach. And now the Scripps stations have jumped in with the Vegas Golden Knights and WNBA deals (see “1” above) and Gray TV (subject to legal challenge) with the Phoenix Suns/Mercury (Nexstar/Clippers started the trend). Indeed, sports is now linear TV, with most entertainment programming on traditional channels continuing in long-term secular decline.
5. Balancing Revenue vs. Exposure. Rights owners always desire two things: maximum exposure and revenue. Increasingly they may have to choose. The NFL just licensed Peacock (owned by a cable operator that lost 614,000 Q1 subs) exclusive rights to a playoff game, sure to drive signups. MLS traded wider visibility on ESPN and the RSNs for much bigger money with Apple and Fox. To be fair, the Apple deal has also simplified discovery of MLS’s schedule (most games on Saturdays and select Wednesdays), eliminated blackouts and established high quality pre-/post- and shoulder programming. Meanwhile, the Phoenix Suns/Mercury are attempting to embrace reach, provided their local TV deals supplemented by a DTC offering from Kiswe are allowed to proceed.
6. Regional Sports Networks. In our last column (SBJ, March 20, 2023), we addressed the challenged RSN business model. Diamond Sports is in bankruptcy, the AT&T SportsNets are handing back the keys to their team partners and Comcast/NBC has already divested its D.C. network to team ownership. Subject to legal challenge, the Suns may be abandoning their RSN altogether. Once local exposure and revenue powerhouses, the RSNs have been devastated by purchase debt, cord cutting, audience declines, reluctance by MVPDs to pay ever-higher carriage fees coupled with high penetration requirements (and, in the case of some virtual MVPDs, refusal to carry at all). Yet RSNs remain identifiable addresses for large numbers of local fans. Pro sports media arbitrage — getting a much higher yield per inner-market subscriber is now at risk. The new model? Less one-size-fits-all. Likely, more lower-yield distribution on a national basis combined with new streaming plus traditional local options. Are salary cap adjustments and further (or lesser) big vs. small market disparities in pro sports upcoming? Stay tuned.
As we’ve crossed the Rubicon, change is everywhere in sports media, and all participants will need to be especially mindful in this new world order. Next installment as events dictate (probably soon).
Ed Desser is an expert witness and president of Desser Sports Media Inc. (www.desser.tv). He has negotiated dozens of current RSN agreements. John Kosner is president of consultancy Kosner Media (www.kosnermedia.com) and managed ESPN’s streaming operations for over a decade. Together they developed league TV strategy and ran the NBA’s media operations in the ’80s and ’90s.
"How to Weather Uncertainty in the RSN Marketplace," John Kosner's Latest SBJ Column with Ed Desser
Original Article: Sports Business Journal, by John Kosner and Ed Desser, March 20th, 2023
Regional sports networks are in the news recently, with the Diamond Sports and WBD/AT&T Sports Networks in financial difficulty. These developments potentially put at risk the major exposure and significant revenue of some 50 U.S. pro sports teams. How should those teams, and others with RSN deals, attempt to weather the crisis? We have these 10 timely suggestions:
Know your agreements. Sounds obvious but the business details, dates, breach and cure provisions, etc., are critical now. Make sure you know about the various contingencies built into your agreement(s), and get legal advice from your team counsel about dos and don’ts.
Keep up to date on industry developments. Things are starting to happen, or at least be reported, day-to-day, so you need to focus much more attention on the matter in the coming weeks. We set Twitter notifications for the key national and local reporters and industry analysts covering this story. Be sure to regularly circulate what you learn to the key executives at your team, including PR, business ops, marketing, etc.
Check in regularly with league media executives, other teams in your market on the same RSN, and other teams served by the same RSN holding company. You can share information that is unlikely to be covered in the trades or business press.
Get educated on the bankruptcy process. Laymen tend to have little knowledge of the process until they must deal with it. Take the time NOW to find out how it works so that you can anticipate the best responses for your organization. You may be surprised.
Understand all of your alternatives. Games used to be carried on local broadcast stations before RSNs. Now there is also streaming, which can be done regionally, nationally or internationally, subject to league parameters. Also, it is possible for a league to make arrangements, which could dovetail with its network (e.g., MLB Network or NBA TV) or through arrangements in combination with out-of-market packages (e.g., NBA League Pass or MLB.TV). Talk to local TV station executives in your market. Some Scripps station executives have already mentioned an interest in getting back into local sports. We expect growing interest from alternative parties. When we worked at the NBA, the focus was on our list of “assets.” What could we deploy as necessary? What are the assets you can bring to bear to improve your local TV business — tickets, events, access, merch, etc.? Put your list together.
Be ready to act yourself. No one cares about and knows your team, your fans, and your market more than you do. That means you should take necessary steps NOW to be ready to produce games, handle sales, and arrange for some form of distribution in a worst-case scenario (see No. 5 above). In our experience, crisis situations can generate novel, sustaining solutions because people have to think differently. The typical RSN broadcast hasn’t changed in decades. What’s the appropriate update for your team? What’s the perfect blend of on-air talent old and new if you have to look at things fresh?
Use this opportunity to generate the best local fan email list now, in case you need to be marketing to them tomorrow. For example, team email lists, social media accounts, season, package, group, and individual ticket buyers can all be prospects. Also, beware that the downstream impact of possibly losing RSN coverage affects your fans, also meaning ticket sales, merchandise, community events — everything down to betting activity.
Perform some local market research. How do your fans feel? What packages would they prefer? What pricing options are they willing to pay? What other streaming services do they already use? What’s the plan for younger millennials, Gen Z, and Gen Alpha, whose viewing behavior is vastly different from older fans? This will help you to build a P&L, with appropriate result ranges. We favor developing actionable questionnaires.
Talk to your sponsors. Perhaps one or more are a good fit as a possible streaming partner. Local retailers, telecoms, and even cable operators could have an interest in an even tighter relationship with your team and your fans. Many are well-positioned to complement your efforts and help you succeed. Casting the RSN crisis as a community opportunity can yield win-win-win local teamwork.
Understand the basics of operating a streaming service. Deltatre, Endeavor, ViewLift, iStreamPlanet, Kiswe and others could provide you with a one-stop solution to the front end, ordering, billing, creating a library, and managing the streams themselves. FloSports and DAZN are also buyers of sports rights in a more traditional manner. There is much more to learn. In our careers, challenging situations forced us to stretch ourselves and become wiser on subjects we knew little about. Long term, those experiences have been invaluable.
Hopefully, you will not experience an interruption in your game delivery and payments, but it’s smart to be ready. Remember former Secretary of State James Baker’s “Five P’s”: “Prior preparation prevents poor performance.” A little bit of preparation now can make all the difference in turning a potential nightmare into a new business opportunity, as the sports media business evolution continues!
Ed Desser is an expert witness and president of Desser Sports Media Inc. (www.desser.tv). He has negotiated dozens of current RSN agreements. John Kosner is president of consultancy Kosner Media (www.kosnermedia.com) and managed ESPN’s streaming operations for over a decade. Together they developed league TV strategy and ran the NBA’s media operations in the ’80s and ’90s.
Questions about OPED guidelines or letters to the editor? Email editor Jake Kyler at jkyler@sportsbusinessjournal.com
“The NFL Makes It Look Easy, But It’s Not,” John Kosner’s Latest SBJ Column with Ed Desser
Original Article: Sports Business Journal, by Ed Desser and John Kosner, February 13th, 2023
Like the old Hollywood joke about a movie so good it directed itself, the NFL’s juggernaut appears effortless … like a Cowboys extra point. In reality, the league has been offering a best practices master class for decades. With the season just concluded, we examine their aggressive, state-of-the-art tactics to maintain and grow media audience, some of which can be emulated. Here’s our Pick Six:
1. The Game
“Quarterbacks are the most important players in sports,” according to Mike Mulvihill, Fox Sports’ executive vice president and head of strategy and analytics. Their preeminence “simplifies and personalizes a complicated game.” The NFL has embraced charismatic stars like Patrick Mahomes (the Steph Curry of the gridiron) who have opened up the sport, dramatically increasing scoring and the pace of the game, while attracting young fans. Tom Brady and Aaron Rodgers are synonymous with the position, but the eight NFL divisional playoff teams were all led by QBs under 30. The NFL markets these players; the rules protect them.
2. Expanding Core Content
In the 1970s, teams played six preseason and 14 consecutive regular-season games, with uniform Sunday 1 p.m./4 p.m. ET doubleheaders and a Monday night game (beginning on low-rated Labor Day weekend), eight teams made the playoffs, the Super Bowl took place on the second Sunday in January, and the (untelevised) draft was staged two weeks later in a hotel ballroom. Non-sellout games were blacked out in the home market, cold weather night games were minimized and the schedule rarely changed. Baseball was the top U.S. sport.
Today, NFL teams play three preseason games, 17 regular-season games over 18 weeks, with staggered starts for the Sunday tripleheaders at 1, 4:25 and 8:30 p.m. ET, plus four morning starts from Europe, prime-time games Monday and Thursday (the season beginning after Labor Day); 14 teams make the playoffs with later start times, the Super Bowl is now on the second Sunday in February, and the draft is a late April, three-day/night traveling spectacle, dissected by three networks, attended by 100,000+. Local blackouts are long gone, every market (including those with a home game) now gets three Sunday afternoon broadcast games (a fourth on the opening and closing weeks), and next season will bring flexible scheduling to both Sunday and Monday nights. The NFL has no peer on U.S. television.
The NFL not only maximized its season (adding few net average additional games beyond those from expansion teams) but also its January/February extension capitalizes on high cold weather HUT (homes using television) levels and routinely frigid night games. Ever opportunistic, the NFL found valuable new promotable opportunities — “Super Wild Card Weekend,” which captures the Martin Luther King Jr. holiday, tripleheaders on Thanksgiving and last year, Christmas Day, with a Black Friday game for Amazon Prime upcoming.
3. Moving to a Year-Round Presence
In addition to its scheduling maneuvers, the NFL has forged a year-round content calendar with its combine and free agency signings in March, the draft in April, the NFL schedule release in May, training camps in July and the preseason in August.
4. Content Innovations
As NFL Films is the granddaddy of in-house sports production, it’s fitting that the NFL has become its own executive producer with NFL Network, NFL.com, premium app NFL+, and NFL RedZone, which revolutionized live sports coverage. It has also redefined access with “Hard Knocks,” highlights with “Inside the NFL” and even has its own daily show, “Good Morning Football.”
SkyCam technology over the years has changed the way NFL games are produced.GETTY IMAGES
5. Maintaining Multiple Media Relationships
In the 1970s, before cable and streaming, all three broadcast networks held NFL rights. Today, the NFL has agreements with all four broadcast networks, the leading national cable sports network, plus huge digital companies Amazon and Google/YouTube, plus Apple is the new sponsor of Super Bowl halftime. Each of the media partners is deeply invested in the NFL, contractually mandated to aggressively promote, and by design encouraged to outdo one another. ESPN’s popular “ManningCast” is an example, as are a set of tech innovations such as “1st & Ten” and SkyCam. Plus, the NFL negotiated itself an early opt-out in these deals. In this dire media environment, its numbers defy gravity:
Per Variety, in 2022, NFL games represented 75% of all sports telecasts that reached 10 million or more viewers last year (figures achieved because the NFL has embraced both broadcast and streaming);
Per The Wall Street Journal, the league has boosted the rights fees for all of its media properties by more than $100 billion in less than three years.
6. Continuously Raising the Bar
No “prevent defense” here. The NFL has had excellent senior media leadership from Steve Bornstein and Howard Katz to Brian Rolapp.
The league commissioned fan research in 2016 resulting in several changes that streamlined game broadcasts, including fewer commercial breaks and advertisements now inserted into dead spots, like instant replay reviews.
They’ve upgraded both markets and venues — Las Vegas and Los Angeles, with state-of-the-art Allegiant and SoFi stadiums.
But traditions live on. In the 1970s, the league marketed “On Any Given Sunday,” trumpeting the competitiveness of its then 26 teams. In 2022, the NFL’s 32 teams played a season with an average victory margin less than 10 points, the lowest in 90 years.
Befitting of a 21st century sport behemoth, the NFL has embraced its own weekly spectacle, where the regular season truly matters. And, of course, everyone watches the Super Bowl (some for the commercials). Some things never change.
Ed Desser is an expert witness and president of Desser Sports Media Inc. (www.desser.tv). John Kosner is president of consultancy Kosner Media (www.kosnermedia.com). Together they developed league TV strategy and ran the NBA’s media operations in the ’80s and ’90s, always with an eye on the NFL.
Questions about OPED guidelines or letters to the editor? Email editor Jake Kyler at jkyler@sportsbusinessjournal.com
"We’ve Officially Crossed the Sports Media Rubicon," John Kosner's Latest SBJ Column with Ed Desser
Original Article: Sports Business Journal by John Kosner and Ed Desser, December 5th, 2022
Our industry reached its point of no return (the “Rubicon”) on Sept. 15, 2022. That’s when Amazon Prime’s streaming service delivered 15 million viewers for an exclusive NFL game, more (and younger) than via traditional pay-TV on NFL Network the same Thursday (Week 2) last season. Under the leadership of Marie Donoghue, Amazon’s technology survived the pressure test. Its Super Bowl-level production complement of six TV trucks and announcers Al Michaels and Kirk Herbstreit provided shock and awe-worthy coverage of the excellent Kansas City-San Diego matchup.
Sept. 15 was a tipping point for sports media. It’s been 35 years since a comparably transformative event — Nov. 8, 1987, when ESPN televised its first NFL game. That telecast heralded an earlier crossing of the Rubicon, starting the sports media balance of power shift to pay-TV from broadcast — buoyed by cable’s then-unique dual revenue streams of affiliate and advertising revenue. In fact, the start of the cable shift, and introduction of daily national prime-time sports, began a decade earlier. In 1977, Ted Turner put Braves games on his Atlanta Channel 17 “SuperStation,” novelly distributed via satellite, to content-hungry, growing cable systems nationwide. Similarly, streamers have been carrying live sports in recent years — just not close to what Amazon achieved this fall.
Over the past four decades, the cable TV industry’s desire to build out its technical plant, and motivate 90% of U.S. TV homes to subscribe, drove cable networks like ESPN to program nightly live major league sports and others to offer uncut, commercial-free movies, 24/7 news, original kids content and music videos. Today, crown jewels like “Monday Night Football” and the college football championship air exclusively on cable, which also has deals for all major pro leagues and college conferences. Sports has proven its unique ability to drive distribution before (NFL putting Fox on the map; and NBA making TBS a full national service, then launching TNT). The best entertainment programming has already made the move: Amazon, Netflix, and HBO Max regularly win awards for best drama, comedy, etc. Now, the question is: Will the streamers have the same desire to fully distribute their platforms by harnessing sports rights in a similar manner?
It seems inevitable:
Prime Video and Netflix each now reach more homes than cable (nearly as many as broadcast TV).
Each major sports league (except so far the NBA) has an exclusive streaming package, and the major soccer properties including MLS, Premier League, La Liga, Serie A, UEFA and Bundesliga are primarily distributed via streaming.
Apple, Disney (including Hulu and ESPN+), Paramount+ and Peacock all now also carry major live sports.
Amazon, Apple and Google each have market caps that dwarf all traditional media companies combined, against whom they can bid for future, more expansive sports rights.
In particular, Amazon is a frightening disrupter because unlike traditional media companies:
It knows not only how many of its subscribers watched each NFL game, but also exactly who they are, and where they live!
Also, how many minutes they watched, when they logged on and off, the streaming device they used, and if they were on a mobile or wired network, watching via Prime Video or its sister service Twitch. (It achieved 15 million viewers on Sept. 15 despite being a product tilted to big screen viewing; advances in its mobile app will only fuel more viewing on phones.)
Amazon knows what other programming that home also watches, and what music they like.
It knows what actual products that home buys, and what they spend each year on e-commerce.
Amazon also has their email, phone and credit card numbers; Alexa even recognizes their voices!
As a result of this Amazon revolution, sports fans who were once largely anonymous — with no direct relationship with the broadcaster, league or team — are suddenly, continuously and personally connected.
In fact, Amazon represents a new world order — it has a triple revenue stream: Amazon Prime subscriptions, advertising and its viewers’ e-commerce purchases. In addition to AppleTV+/Music/News subscriptions and its own burgeoning ad business, Apple also has a third stream: hardware (iPhones, iPads and Macs). With the three revenue sources, immense cash reserves and global scale, Amazon and Apple can choose to investment spend on anything they wish, elbowing out traditional media competitors, provided they believe it can ultimately benefit their core business.
Having crossed the Rubicon, what’s next?
In terms of game coverage, we see an end to delaying the start and/or joining a game in progress. Every game will be shown in full, complete with the pre/postgame shows. If a game runs long, you can watch it, or the next game (live or delayed), or even watch both simultaneously.
We also foresee the demise of the standalone broadcast. Amazon is complementing its Michaels/Herbstreit main broadcast with other feeds including from Dude Perfect and LeBron James’ The Shop; that’s just the start. Apple will stream MLS games worldwide; and sports now has an instant global backstop service option.
From a business perspective, dated exclusivity grants will be re-examined by rights holders looking to supplement linear reach to target different demographics via non-traditional platforms.
For the fans watching, there will be more variability, customization and creativity. That’s all to the good. But, all of that will come at a steeper price with more service subscriptions and increased fragmentation. After all, crossing the Rubicon is one-way only, and not toll-free!
Ed Desser is president of Desser Media Inc. (www.desser.tv). John Kosner is president of Kosner Media (www.kosnermedia.com). Together they developed league strategy and ran the NBA’s media operations in the ’80s and ’90s.
"How To Be a Great Sports Media Partner," John Kosner's latest SBJ column with Ed Desser
Original Article: Sports Business Journal, by Ed Desser and John Kosner, October 17th, 2022
The Seven Habits of Highly Effective Media Partners
Recently, we wrote how the unique NBA on NBC partnership changed our industry and elevated the NBA (Sports Business Journal, Sept. 19, 2022). The friendship of visionary leaders Dick Ebersol and David Stern galvanized both organizations. But you don’t have to be an industry icon to become an excellent media partner. It is a way of thinking about relationships, creating value for all. Here are seven pointers we’ve picked up from our experiences at the NBA and after:
The answer is “Yes!” The best way to build mutually beneficial relationships is to view the success of your partner as your success. Make your default to figure things out, which frequently will be contagious. When Bob Iger was CEO at Disney, he spoke often about the importance of optimism — bring that to your relationships!
Over-deliver: Doing more than what is expected makes an impression. When CBS broadcast the NBA, it used three to four replay devices. Moving to NBC, we wanted four or five. NBC made eight replay units standard, even for regular-season games. We did not have to ask. That approach pushes the other partner to go above and beyond too.
Anticipate needs: What’s better than getting “Yes!” for an answer? Again, never needing to ask. For example, we knew which NBA arenas had poor lighting and/or camera locations. We took those challenges on ourselves, before partners complained. That spirit continues today as the NBA initiates technical enhancements that provide future solutions for the league’s global broadcasters.
Know your partner’s business (better than they do): That was quintessential David Stern — not satisfied with the NBA being experts of (only) our domain. Hyperbole? Sure! But the emphasis is right. We knew how important the Olympics were to NBC. That drove urgency in the formation and marketing of the 1992 Olympic Dream Team and all that followed. Did that success extend to the NBA? Of course, but that’s the point of effective teamwork. The NBA was similarly instrumental to Turner, agreeing to switch from TBS to TNT once the latter reached 30 million subscribers (achieved in record time) — a possible streamer’s tactic today.
More partnership examples from other sports:
When it renewed its deal with Fox in 2020, the NHRA knew the network had to hold multiple fall Sundays open for NFL doubleheaders, even though the NFL would only schedule single Fox windows on half of those dates. By planning a series of “playoff” races on several straight fall weekends, NHRA could guarantee Fox an event on at least one of those “singleheader” Sundays. On Sept. 18, following its NFL game, the NHRA on Fox drew 1.7 million viewers, its most-watched race ever.
In 2010, ESPN and MLB’s digital arm BAM were spirited competitors although ESPN was (and is) a longtime MLB rights holder. At ESPN, we knew the quality of BAM’s streaming infrastructure and discussions revealed an opportunity: BAM was built for the baseball season, while our streaming needs were focused on college football and basketball. The result: BAM became a valuable “white label” solution for ESPN, setting the stage for Disney’s eventual purchase of BAMTech five years ago.
Fox has a lighter event calendar in the spring. The Pro Bowlers Association developed a weekly “PBA Playoffs” series after college basketball ends, providing weekly content for Fox and an additional programming series for the PBA.
Forge true partnerships: In 1990, the NBA had a lot to prove when NBC scheduled a huge increase in games from the handful CBS had broadcast. To deliver the highest possible audience (and ad sales), we needed a great schedule. NBA scheduling savant Matt Winick and Ebersol worked together each summer to craft key matchups to maximize audience. In fact, Dick sat backstage during the NBA Draft (which NBC wasn’t even carrying). An emphasis on similar “win-win” teamwork yielded a revenue-sharing approach, which strengthened NBC’s and Turner’s advertising businesses and ultimately paid the NBA hundreds of millions extra from sales growth. And in 1997, the partners combined to launch the WNBA, which just completed its 26th season!
The same partnership logic applies to smaller properties. The National Finals Rodeo in Las Vegas is the sport’s Super Bowl. In 2020, the Professional Rodeo Cowboys Association moved its full-season linear TV events package to Rural Media Group’s RFD-TV/Cowboy Channel, securing added rights fees and a more comprehensive broadcast schedule. Rather than selling its direct-to-consumer product in a lucrative streaming deal to a third party, the PRCA doubled down, co-developing The Cowboy Channel Plus, a rodeo-oriented DTC product with its partner RMG.
Think big: Extraordinary relationships can deliver unheard-of innovation. Together, the NBA and NBC developed “NBA Inside Stuff,” a weekly tween-targeted show about league personalities. We still hear from young fans who grew up watching it.
Finally, over-communicate! Schedule regular get-togethers. Plan a preseason summit meeting for executives from each company. Do a postseason debrief. Develop social relationships at your events. This fosters goodwill and leads to true successes, while minimizing the risk of the worst-case scenario: surprising your partner with bad news. And when you are dealing with bad news, remember, delivering that news quickly can actually be a gift — especially if the partners address the problem together. That’s the value of a trusted relationship.
Considering today’s myriad challenges and ever-increasing marketplace complications, being a good media partner is even more important. It’s a state of mind, and a way to get noticed!
Ed Desser is an industry expert witness and president of Desser Media Inc. (www.desser.tv). John Kosner is president of Kosner Media (www.kosnermedia.com). Together they developed league strategy and ran the NBA’s media operations in the ’80s and ’90s.
The NBA On NBC Partnership: The Relationship changed sports media and crowned the NBA," John Kosner's latest SBJ column with Ed Desser
Original Article: Sports Business Journal, by John Kosner and Ed Desser, September 19th, 2022
NBA Commissioner David Stern and NBC’s Dick Ebersol worked together to greatly expand the league’s coverage.
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“A spectacular move!” Sports fans know the clip — Michael Jordan switching hands in mid-air to score; the call from the legendary Marv Albert. But we’re writing about another, similarly spectacular move made by the and NBC on Nov. 9, 1989:
NBC stunned the industry 33 years ago by paying the NBA $600 million-plus, more than triple what the incumbent had been paying, putting the NBA on the map, cementing the visionary reputations of NBA Commissioner David Stern and NBC Sports President Dick Ebersol as sports impresarios, and birthing a truly unique league/network “marriage” that netted (pun intended) a massive “win-win.” It represented a pivotal moment in our careers, and reordered sports media, transforming the NBA.
First, the context: Ed joined the NBA in 1982 as its director of broadcasting/executive producer; John started out as programming assistant at CBS Sports. That season, CBS scheduled only five regular-season NBA games — each involving the Lakers, Celtics and 76ers. Until 1982, weeknight NBA Finals were on CBS late-night tape-delay, so concerned was CBS not to air NBA games in prime time during the crucial “May Sweeps.” The NBA was a programming stepchild. “Our fans like us,” Stern once mused to John, “but they don’t like themselves for liking us!”
The NBA began to rally in its final years with CBS, as Ted Shaker took over as executive producer, adding innovations like “At the Half with Pat O’Brien” and slicker productions that highlighted the many emerging NBA superstars, like Jordan. Just after 6 p.m. ET on Sunday, May 7, 1989, Jordan electrified the nation, hitting the hanging, series-deciding, buzzer-beater over the Cavs’ Craig Ehlo in the opening round of the playoffs. We took note.
We were now working together at the NBA. CBS itself shocked the industry (and us) by paying $1.1 billion to take away NBC’s 41-year national TV “birthright,” providing NBC with airtime and motivation, and us an opportunity.
The rise of Michael Jordan, shown here after winning the 1991 title, further added buzz around the NBA and NBC’s coverage.
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With the NBA’s TV agreements expiring, we set out to -ize the NBA so that it could become the premium network sports property after football season. Rather than accept a network-centric new agreement, we drafted our own form, specifying key required elements — “the stuff.” We wanted weekly Sunday doubleheaders, “major sports” level of production equipment and an actual pregame show “in a studio,” not in front of a wall of monitors or a temporary set in the stands, as CBS had resorted to for budgetary reasons. And we wanted substantial on-air promotion, and cross-promotion between network and cable partners, to expand audience awareness of the NBA. “We willingly promoted games that were airing on, even though it was unheard of at the time,” Ebersol notes in his new book. Our goal made it very hard to stay with CBS, which had the NCAA Tournament, PGA Tour, and now MLB. And, perhaps most importantly, CBS didn’t see the NBA as we … or Dick Ebersol did.
“Within 48 hours of when I started the job at NBC Sports, I went to … meet with David. We hit it off from that point,” Ebersol recalled recently. “Prime time was what we were selling — not just for the Finals or later rounds of the playoffs, but finding ways of getting Sundays into prime time.” Of course, Ebersol and Stern recognized the Jordan/Ehlo effect too.
Ebersol is on the Mount Rushmore pantheon of sports legends, along with his mentor, Roone Arledge, and Stern. What distinguished Ebersol and Stern was that not only did they think big — they did big. That summer, Ebersol (who ultimately served as NBC’s chief executive, programmer, and executive producer for the NBA on NBC) traveled to D.C. to meet with FCC reps — the topic: Could a sports program that contained educational content qualify for the mandated Saturday morning Network TV kids block? The answer wasn’t “no.” Ebersol’s legwork begat “NBA Inside Stuff,” a weekly program produced by NBA Entertainment that ran midday on NBC just prior to live sports every Saturday for 12 years, indoctrinating generations of young adults to the NBA.
So strong was the partnership between Ebersol and Stern, and their respective standings so high with their employers, that Albert’s trademark “Yes!” became the default response when the league or network asked something of the other. As Ebersol said in his book, “the partner always came first.”
Links to NBC / NBA video clips:
John “Tesh Roundball Rock”
NBC’s signoff (all the great moments)
An “NBA Showtime” pregame show from the first season
In a novel move, NBC provided the NBA with a $10 million/year bank of prime-time promotion, which led to the “I Love This Game” campaign. A dozen-plus executives, production people, marketers and ad sellers from both sides gathered weekly for lunch, forged relationships and created great value together. They were afraid not to because Ebersol and Stern made cooperation and success an imperative. “Meetings like that had never happened before in any partnership between a league and network,” Ebersol said. The evocative “joint logo” was emblematic of the parties’ collaborative, integrated spirit.
One star was Jim Burnette, head of NBC Sports sales. Burnette knew the NBA was particularly strong in the second quarter, which was heavy auto sales season. He boldly expanded CBS’s previous two NBA-exclusive auto advertisers to eight, each getting one-quarter of exclusivity and four units every other game. And he moved fast. At the 1990 Super Bowl, Burnette successfully made the pitch, getting seven autos (including GM, which bought two eighths). He also lined up McDonald’s as the halftime sponsor, locking in revenue of hundreds of millions in just a couple of months. Shortly thereafter, the economy collapsed. CBS’s first World Series was a competitive and financial bust (a four-game sweep). But the NBA on NBC was already on a solid financial launchpad.
Two years later, when the NBA and NBC extended their already hugely successful agreement early, the parties added an ad revenue share. That heralded an unprecedented amount of information-sharing and created a practically unheard-of fertile environment, where the league was actively seeking advertisers for its network partners and vice versa.
Eight years after the NBA on CBS had scheduled a five-game regular-season slate, NBC aired 26 games featuring 14 teams. Now there was a legitimate pregame show, “NBA Showtime,” superbly hosted by Bob Costas, and the doubleheader games voiced by play-by-play legends Albert and Dick Enberg. The sidelines were patrolled by Ahmad Rashad, who initially bristled at Albert’s tag, “The Dean of Sideline Reporters,” until he realized that fans liked it. The first NBC analyst, Mike Fratello, was similarly dubbed, “The Czar of the Telestrator.” John Tesh wrote the score, “Roundball Rock.” It was a show, and it was fun.
Whereas CBS was often plagued with local station preemptions, Ebersol had NBC affiliate relations offer the NBA schedule as an “all or nothing” block. The stations had little choice and the NBA had 99%-plus distribution. This helped ratings, as did Ebersol’s understanding of Nielsen. By forgoing a pre-tip break, Nielsen would start the national rating during live action, and the closer the last spot ran to the end of the game, the higher the game’s average. In its first season, NBC was also rewarded with a dream Chicago-L.A. Lakers final, an actual changing of the guard from to Michael, and a ratings hit.
NBC offered the prime-time exposure, and shoulder programming, the NBA needed to boost fandom.
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In late April 1992, the Rodney King riots gripped L.A., scrambling the playoff schedule. Working together with the NBA’s longtime schedule maker Matt Winick, we imagined an opportunity. With three games on Sunday, May 9, but only a doubleheader booked for NBC, what if … we could convince NBC to go at 12:30, 3:00 and 5:30 p.m. ET — the first NBA network tripleheader, climaxing with a must-watch game: the champion Bulls with Jordan at the Knicks with Patrick Ewing and coach Pat Riley. Going nearly unopposed 5:30-8 p.m. ET on Sunday wasn’t possible at CBS (“60 Minutes” was untouchable). But we got to “Yes!” quickly, also by borrowing another NFL innovation: offering the local NBC stations a halftime news break to make up for the news preemption. That night, the Knicks shocked the Bulls, providing a powerful NBC prime-time lead-in during the May sweeps. From then on, tripleheaders and the late Sunday window became the norm for the NBA on NBC, many distinguished by remarkable performances from Jordan.
Stern taught us to understand and strategically use our “assets.” The 1992 Olympics Team is a great example. The USA team had to qualify for Barcelona. The NBA and NBC staged and marketed their “Beatles-like” Dream Team debut. At the Olympics, Ebersol opened prime time with Dream Team games, introducing huge audiences to stars like Karl Malone, David Robinson and Charles Barkley — not to mention Larry Bird, Magic and Jordan, captivating the world and catapulting the NBA to an even higher orbit.
“I miss David every day of my life. He was a … stimulator in my life and a great, loyal friend,” said Ebersol last month. Stern would have said the same, especially if the NBA retained the 5:30-8 p.m. ET time slot and a share of ad revenue!
Today, Ed Desser (www.desser.tv) and John Kosner (www.kosnermedia.com) each operate sports media consulting businesses. They collectively served three decades as the senior media executives at the NBA, collaborating during the heyday of the NBA on NBC.
"Make Media & Tech Innovations Work for You," John Kosner's latest SBJ column with Ed Desser
Original Article: Sports Business Journal, by Ed Desser and John Kosner, August 29th, 2022
You ain’t seen nothin’ yet!
That’s our feeling about sports media. As you try to follow the accelerating changes, we’re here to help. Our suggestion: Follow the Tech. We see nine key innovations changing our industry this decade:
Real-time information: The power of sports is that it’s live and its intrinsic appeal cuts across all demographics, getting everyone simultaneously focused on a single event. Yet, we’re just scratching the surface. You’re typically streaming 45 seconds behind live action. Trying to find a game? Good luck! Powerful solutions are coming — score fixes for your phone and wearables, sub-second latency streaming, and the race is on to provide the 21st century sports “TV Guide.” No more sports fan FOMO! Instant custom curation of live events, triggering tune-in for start of games, significant in-game reporting, social interaction, sharing of remarkable plays and propagation of data to drive gambling.
The cloud: It’s fashionable to deride personalization as an overhyped pipe dream. But the ascension of giant cloud companies and privacy-protection software will enable sports properties with significant data to join forces, unlocking the ability to truly know their fans, creating huge value. And for fans, finally, the opportunity to get value from that shared knowledge such as combined packages of streaming, tickets, merchandise and exclusive team/player access. But cloud innovations extend well beyond that. Today, game telecasts can be directed on an iPad and voiced from any location on the globe with a high-speed connection.
Games: Growing up, TV was our default. Now, playing games is mainstream — as an activity and a business. In the past five years, viewing of esports and game streamers has exploded on Twitch and YouTube, transforming spectators into participants. See the effects in traditional sports game presentation (EA’s Madden has meaningfully influenced NFL coverage with Skycam for NFL telecasts). Today’s carefully produced live-event megacasts will soon be supplemented by platforms giving everyone a voice. Here, podcasting presents a true launching pad. Example: JJ Redick on ESPN. League video game rights may rival broadcast fees (see FIFA’s next agreement following its 30-year partnership with EA).
Betting: Consolidation in sports betting will trim today’s dozen players into a big 3-4, and the reality of sports’ “big bet” on gambling will play out. Betting advertising will become national too. Other effects are uncertain. Through aggressive industry marketing, some fans are already more interested in their fantasy players or action on a particular game rather than “their” team. We foresee increasing friction over vague “official” injury reports. In-action wagering, powered by sub-second latency streaming, is also coming. Look for MVPDs to embrace “live live” sports as a rationale to stay subscribed to the endangered TV bundle. All of this will challenge the unified fabric that’s traditionally made sports, sports.
Artificial intelligence: Startups mastering computer vision (“Shazam for Video”) are revolutionizing everything from content algorithms to sports video highlights, social media monitoring, athlete scouting and combating streaming piracy. Astonishingly, most of these breakthroughs will be invisible to fans. Fans will find themselves watching more TikToks, not sure why, but noticing more, better and increasingly tailored services. The combination of relevant AI data and cloud breakthroughs will further accelerate development of new sports products and services.
Networks for everyone: As audiences continue fragmenting, today’s social media networks will simply be “networks,” proliferating especially among elusive younger fans. The dominant social media experience at the 2028 L.A. Olympics has probably not even been created yet! Rights holders will have to work much harder just to identify and engage their audiences. Networks have already established virtual sports bars for fans to gather and express fandom, promote content and events, allowing players and teams to directly communicate, an on-ramp to …
The metaverse: At the height of COVID, 300 million people attended 2D interactive meetings on Zoom — building blocks of the metaverse, where people go to do things together. As Everblue’s games expert Dylan Glendinning explains: “A place where your digital identity is just as important as your physical identity.” Our former colleague Steve Hellmuth points out the significant role of key NBA partner Microsoft. It hosts sports and games (Xbox, Halo and soon, presumably, Activision), and it’s a leading funder of the metaverse, making virtual workplaces productive (270 million active “Teams” monthly). Expect the creation of new 3D interactive services as sports and games experiences merge.
Premium streaming: We expect streaming’s superior user experience to continue slowly decimating the traditional TV bundle. From a business standpoint, it’s a mixed bag. Streaming allows content owners to go direct, eliminates the need for middlemen, creates many new bidders for rights, allows for wide variety of new offerings and has created an exciting market in sports docs. AppleTV+, Prime Video, FloSports, ESPN+, Paramount+ and Peacock each expand demand for live sports while simultaneously attacking the bundle (where the money still is), spreading audiences thinner. In addition, for the most popular games, streaming millions of feeds is inherently inefficient versus traditional multicasting. The challenge, regardless, will be getting young fans to pay considering that …
Free streaming is also exploding. Not just YouTube, Twitch, Snap, Instagram, Twitter, but also the doppelganger FAST services (free ad-supported streaming) being launched by all top pay TV networks, the vast competition for time and attention from user-generated interactions detailed above, and pay TV piracy.
There is no clean, well-lit path ahead. Our best intelligence is to improve your product by making these and other technical innovations work for you.
Ed Desser is an industry expert witness and president of Desser Media Inc. (www.desser.tv), which has advised on over $30 billion in sports/media transactions. John Kosner is president of Kosner Media (www.kosnermedia.com), a digital media expert and sports startup investor. Together they developed league strategy and ran the NBA’s electronic media operation in the 1980s and ’90s.
Questions about OPED guidelines or letters to the editor? Email editor Jake Kyler at jkyler@sportsbusinessjournal.com
"Why the Metaverse will be Epic," John Kosner's latest essay with J Moses
Original Article: Why the Metaverse Will be Epic, by John Kosner and J Moses, June 13th, 2022
Avatars from Blueberry Entertainment
It’s June, 2025 and we have tickets to the NBA Finals in Boston. Before we attend the game, we’re picking up one-of-a-kind outfits from Blueberry Entertainment. Yes, these outfits are actually for our avatars only (we have them for every game) … we’re attending the Finals in the NBA metaverse. And 19,580 fans will be there in person at TD Garden and the game will still be broadcast on network TV. But now there’s a new way to experience all of the action. NBA Commissioner Adam Silver has made the point that globally 99% of NBA fans never have the opportunity to see a game in person – now we are all another step closer. As is the connection between sports and games.
Peter Warman, the co-founder and now chairman of Newzoo, has fashioned the game’s version of “Moore’s Law” – namely that every five years since the breakthrough of online games in 2002, total engagement with games (measured by the number of people playing multiplied by hours spent) doubles. We’ll call that “Warman’s Law.” Over the past 20 years, we’ve seen unique accelerants like mobile and the free-to-play business model. The most-recent doubling to 1 trillion hours of engagement from 500 million has been driven by streaming of Esports and game streamers on Twitch, YouTube, and their Asian peers.
Warman makes the point that games and their developers put engagement first and believe money will follow. And it has. He estimates that in 2022, games will drive a stunning $203 billion in DTC (direct to consumer) purchases alone. That is larger than film, TV, and music combined and growing faster than all of them. Warman forecasts that the next double will be driven by the Metaverse and, within that, NFTs (non-fungible tokens) and P2E (play-to-earn) games – introducing ownership and authenticity to digital, making it easier to integrate with the “real” world.
Warman also has a measured definition of the Metaverse that we agree with: “a place people go to engage in any way or combination of ways they desire, together with others.” Games biz whiz Dylan Glendinning of Everblue Management, adds: “a place where your digital identity is just as important as your physical identity.”
We believe this is already happening.
Will the future of the metaverse be 3D interactive, virtual or augmented reality, all or none? Right now, we don’t think it matters. From a tech standpoint, the key to us is compatibility … and that’s why we think a game company is best situated to help fans begin to realize that potential. Game companies already allow players the most flexibility to express themselves in digital environments – not just to socialize, but to play games, flex for each other, even build actual businesses together.
When we were growing up, turning on the TV was the default leisure activity. Now, games are mainstream – both as an activity and a business. There are the games, the gamers (3.1 billion worldwide; half spending $11 per month on game content … talk about “RCS” – recurrent consumer spending!), the young audiences, game engines, and game developers. And, ascendant in youth culture per Warman’s stats, Esports.
There are a number of game companies with tremendous potential to build big businesses in the Metaverse … our focus today is Epic Games. They appear to have all the pieces – and a key differentiator, Unreal Engine (UE).
It starts of course with Epic’s existing metaverse, the online game Fortnite. Epic released Fortnite originally in 2017. It has become a global phenomenon, attracting 350 million players. Every day, gamers gather to play with friends and other players in the Fortnite metaverse. They own stuff. On the platform, they attend concerts, hang with celebrities, shop the Epic Games Store. It’s annually a $5 billion ecosystem with its own currency, V-Bucks, that can be bought with real-world funds, but also earned through successful activities within the games. In fact, Epic sells $3B of digital skins alone per year. Later this year, the Fortnite Esports tournament will return after a 3-year COVID hiatus.
Now imagine Fortnite gamers able to stroll around a much larger 3D metaverse. One that includes not just TD Garden but also SoFi Stadium, Wrigley Field, movie theatres, music clubs, and sports betting establishments. In their gear. With their friends. Packing their Fan Tokens. Able to use their V-Bucks to watch sports, concerts, or movies.
And, Epic has another huge advantage. It owns Unreal Engine, the game engine Epic uses to run Fortnite. It is a strategic asset. Games are notoriously expensive and difficult to create. Unreal is free-to-use for non-commercial use and levies a low royalty fee on big-budget games, saving thousands of developers millions of dollars of dev work. UE offers a full menu of products that can easily be purchased and integrated into any game; new development will enable the creation of NFT-based P2E games. Today, most popular games today are sitting on either Unreal or its competitor engine, Unity. Per Epic, 48% of next-gen console titles are being built on UE as well as eight titles that have generated over $1 billion. Here is what matters most: all of these games built on the Unreal platform have some form of compatibility and a partnership opportunity with each other.
This is critical because we believe the Metaverse will mirror today’s game business: walled gardens. And the key to success in the Metaverse will be compatibility or in the Web3 vernacular – “composability.” If you own stuff and currency in one metaverse, you’re going to want to take it to other metaverses. We might live in a decentralized future but a definitive advantage goes to the metaverse where the most people hang out – because that metaverse is going to be able to leverage the other metaverses, drive subscriptions, micropayments, etc. Discord plays that centralized decentralized role as a communications platform right now.
In addition to its 350 million Fortnite players and all of the new game development using UE, Epic is also building a war chest and mounting a challenge to Roblox and Minecraft in pursuit of time spent from young audiences. In April, Epic announced a $2 billion funding round, featuring additional investment from Sony and The Lego Group parent company KIRKBI. Including the new funding, Epic now has a valuation of $31.5 billion. Teaming Epic with the creators of both the Playstation and The Lego Group presents significant opportunities.
Of course, the competition too will be epic.
Meta, formerly known as Facebook, is single-mindedly focused on building the metaverse – in a way as Jack Dorsey observed that only a founder-led company can be. Meta is VR-centered as it has continued to build out its Meta Quest platform. But will our children choose Facebook as a metaverse hub vs. one created by a game company? We don’t think so. Games are the biggest entertainment category for Gen Z and Millennials and a close second (to music) with Gen X.
Microsoft could have an early edge. Not only will it host sports (key partner with the NBA) and games (Xbox, Halo, and soon, presumably, Activision) but it is among the major corporations funding the first iteration of the Metaverse, focused on making virtual workplaces productive, leading with its Teams product (270 million monthly active users). Microsoft is also a trusted brand. Note: Xbox and Unreal Engine have been partners now for 20 years. Within games, Roblox has more players compared to Fortnite, plus the ability for users to author content within their ecosystem. And Niantic, the Pokémon Go creator, raised $300M at a $9 billion valuation last November to build a metaverse based on augmented reality and the outside world. Niantic’s Lightship AR Developer Kit (ARDK) enables game developers to build AR games for free if they have a basic knowledge of the Unity game engine, the key UE competitor.
To Newzoo’s Warman, the Metaverse is nothing more than a natural evolution, pioneered by games two decades ago. We agree and see both sports and games as early winners. Sports because its large passionate audiences drive new experiences and businesses. And games because they will define the development of the Metaverse. On that front, Epic has a significant head start with Fortnite, a healthy balance sheet, strategic partnerships, and Unreal engine. But like the gauntlet run by the NBA Finalists, there’s a Murderers Row ahead with Meta, Microsoft, Niantic, Roblox, Riot, Take-Two, Sony, Steam, and the many, many others.
Game On!
This is the fifth in a series of essays about why games are ascendant in culture, especially among young people, and what those of us in Sports, Media, Investment … all of us in business … can learn from games. In our last installment, "The Adrenaline Economy" published in May 2021, we noted that Fans want action, involvement, real-time engagement. Entertainment options providing that electrical current are thriving; those that don’t are falling behind. We noted that one service with adrenaline is TikTok, "The World's Fastest Growing Game." We wrote that the massive virtual goods business in games worth $79B annually is coming to sports, finally, with the advent of “NFTs,” non-fungible tokens, "Is Gonzaga an NFT?" And we opined about how games naturally promote and benefit from super-engaged communities "A Trillion Hours! Why Community Is The Game Behind The Games."
John Kosner is President of Kosner Media (www.kosnermedia.com), a digital and media consultancy, and an investor and advisor in sports tech startups. He was the senior digital executive at ESPN for 15 years. J Moses has been in and around the Sports, Games, and Tech businesses for over 40 years. He has been a Director at T2 since 2007 and is currently an Executive Producer on a scripted Esports show for the CW (www.optinstudios.com).
“The Sports Streaming Evolution Halftime Report,” John Kosner’s Latest SBJ Column with Ed Desser
Original Article: Sports Business Journal, by John Kosner and Ed Desser, June 6th, 2022
The sports media industry is evolving, as streaming platforms begin to occupy beachfront once exclusive to linear TV. This is the first material platform change since cable arrived over 40 years ago. So where does this evolution stand, and what does it portend for the future?
First, let’s recognize what has not changed. Despite the decade-loss of 30 million subscribers, traditional linear networks continue to own the key rights for all major U.S. sports properties. Back to the future, a growing 18 million homes get top events ranging from four NFL games/week to the NBA Finals, World Series, Olympics, and PGA Tour, via a $15 antenna.
However, much has actually changed. Three of the four major pro leagues have made significant streaming moves. The bellwether NFL has sold Thursday Night (albeit its lowest-profile package) exclusively to Amazon. Recent MLB and NHL deals have included new streaming rights with AppleTV+, Peacock, YouTube, ESPN+, and Turner. Every major international soccer package (and perhaps soon, most MLS) is provided via streaming. Sinclair is planning a direct-to-consumer version of its RSNs, and half of the UFC is on ESPN+. Thus ESPN+, Peacock, and Amazon are already must-haves for big UFC, NHL, NFL, and soccer fans, in addition to cable.
Recently, streaming’s seeming inevitability hit a speed bump: Netflix actually lost subscribers … and half of its market cap. Suddenly all entertainment companies were under scrutiny. The vaunted NFL may license Sunday Ticket to a streamer, Apple, Amazon, or ESPN+, but it hasn’t happened yet. Has the pendulum started swinging back to traditional TV?
Far from it.
The traditional one-size-fits-all bundle of linear channels to 90% of U.S. homes is gone. The broadcast networks have lost 95% of their adult 18-49 average prime-time entertainment ratings over the past four decades. Today, “prime time” more aptly describes each of Amazon and Netflix’s ~75 million U.S. subscriber universes and even the 95% of 18-29-year-olds who use YouTube; indeed, consumers love streaming (3+ hours/day!). Undifferentiated, all-you-can-eat linear programming buffets are giving way to more targeted, optional packages, all with much better navigation and curation, with or without ads and/or sports, and priced depending on ads, number of streams, or resolution quality. Sports are no longer a required buy for all pay-TV viewers. For sports fans, however, discovery of what you want has become much harder (good luck figuring where) with an average viewer now using seven different video sources!
Major rights packages including the Big Ten, NASCAR, Big 12, Pac-12, and NBA are soon coming to market. Will prior packaging persist, or will the shift to streaming continue? Yes!
Despite losing substantial reach, and more of their audiences, linear networks remain the primary gathering place for live sports. The sports industrial complex retains the experience, know-how, relationships and affiliate and ad revenue streams. Most important, the incumbents need to remain heavily invested in sports. Yet, each of them (except Fox) is also investing heavily in streaming. ESPN+, Paramount+, Peacock, and HBO Max are all in growth mode. They require marquee, monthly, differentiated content like sports to drive and retain paying subscribers.
Digital giants like Apple, Amazon, Netflix, and Google don’t necessarily need sports yet. However, commoditization is contributing to rising churn for all streamers. Every app is basically the same: an endless stream of horizontal tiles. It’s harder to distinguish any particular on-demand entertainment content, especially when so much is already free on YouTube and TikTok. Sports is the only genre that drives passionate audience day-and-date “tune-in” nightly at scale. And as leading streamers including Netflix are now embracing advertising, nothing tops sports.
Looking forward, we anticipate that streamers will return to favor — especially those buoyed by sports. That will trigger further growth in sports rights, powered by bigger streaming allocations.
We expect other changes, too. With fast-shrinking pay-TV plus slow-growing OTA-only homes, about 90 million today have sports access to the premier events. That leaves a rising 30 million outside the main sports ecosystem, without linear TV! Streaming better serves the 100+ million broadband homes — so look for leagues to further embrace that growing medium.
Also, just 34% of 18-29 fans buy network packages. These millennials spend just 20% of their entertainment screen time on TV, compared with 52% for baby boomers, and are far less interested in entire games.
Streaming-influenced changes in games packages are also on the way. Live, full-length games will continue to be offered, in more ways (ManningCast, BradyCast?), but there will also be a multitude of new sports formats targeted at different fan interests. Real-time “Red Zone”-like offerings of portions of games, heavier use and distribution of customized highlights, and integration of live events with gaming, social media, commerce, gambling, and NFTs will continue to change the game-viewing experience. Whoever succeeds in enhancing discovery for live sports viewing will have a true business breakthrough.
When we started at the NBA, the ultimate prize was a big broadcast TV package, with prime-time games, which automatically delivered massive audiences. Viewing is now splintered, but sports always cuts through. We expect more platforms embracing sports to attract (“lift”) and retain subscribers (as cable has done for decades). But, for now, the traditional sports media players will leverage their leadership continuity, albeit at thinner margins, as they build streaming businesses. Like the victors of the NBA and NHL finals series, it will take an extraordinary effort to win.
Ed Desser is an expert witness and president of Desser Sports Media Inc. (www.desser.tv). John Kosner is president of Kosner Media (www.kosnermedia.com). Together, assisted by Neil McDonald, they developed league strategy and ran the NBA’s electronic media operation in the 1980s and ’90s.